Enterprise Value Calculator

Written by:
PK

Below is an enterprise value calculator. Enter a company's market capitalization, its total debt, and any cash or cash equivalents it holds to compute an enterprise value

Enterprise Value Calculator

What is enterprise value?

Enterprise value is a fairly exhaustive measure of a company's value which includes both equity and debt in its count. Enterprise value adds all outstanding liabilities to a company's market capitalization and nets out the cash a company holds to derive a more accurate value of a firm's worth.

Enterprise value vs. market capitalization

Market capitalization only measures the value of a company's equity, neglecting company liabilities. Additionally, some companies hold significant amounts of cash that could readily be paid out to shareholders or invested in growth or acquisitions or buybacks, which needs to be valued somehow.

Enterprise value is closer to the market's implied current purchase price of a firm. While only equity captures the earnings upside of a firm, debt generally has first dibs in any default scenarios. EV better captures how many companies finance their activities by properly accounting for liabilities.

Enterprise Value Formula

The enterprise value formula is:

Enterprise\ Value =market\ capitalization+liabilities-cash\ \&\ cash\ equivalents

Where:

  • Market capitalization - the value of outstanding equity of a company.
  • Liabilities - All short and long-term debts and liabilities of a firm.
  • Cash & Cash Equivalents – Cash and instruments nearly as good as cash, from the company's balance sheet.
      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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