Enterprise Value - EV

What does it Mean? A measure of a company's value, often used as an alternative to straightforward market capitalization. EV is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
Investopedia Says... Think of enterprise value as the theoretical takeover price. In the event of a buyout, an acquirer would have to take on the company's debt, but would pocket its cash. EV differs significantly from simple market capitalization in several ways, and many consider it to be a more accurate representation of a firm's value. The value of a firm's debt, for example, would need to be paid by the buyer when taking over a company, and thus EV provides a much more accurate takeover valuation because it includes debt in its value calculation.

Terms Related Links

Cash And Cash Equivalents
Debt
Enterprise Multiple
Enterprise-Value-To-Sales - EV/Sales
Equal Weight
Market Capitalization
Preferred Shares
Takeover
Total Enterprise Value - TEV

Terms Related Links
EV Gets Into Gear - Learn how enterprise value can help investors compare companies with different capital structures.

Value Investing Using The Enterprise Multiple - This simple measure can help investors determine whether a stock is a good deal.

Investment Valuation Ratios: Enterprise Value Multiple - This measurement allows investors to assess a company on the same basis as that of an acquirer. For more information, see this section.

Relative Valuation: Don't Get Trapped - This method of valuing a company can make a company look like a bargain when it is not.

Peer Comparison Uncovers Undervalued Stocks - Learn how to put one of the top equity analysis tools to work for you.




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