Enter the market capitalization, minority interest, preferred shares, value of debt, and cash to calculate the enterprise value.
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Enterprise Value Formula
The following formula is used to calculate the enterprise value of a company.
EV = MC + D + MI + PS - C
- Where EV is the enterprise value
- Enterprise value is a measure of the total value of a company with respect to the values above
- MC is the market cap
- Market Capitalization is the value of all of the outstanding shares of a company
- D is the debt
- debt is the amount of outstanding monetary commitments
- MI is the minority interest
- equity owned by an investor or company with less than 50% interest
- PS is the preferred shares
- stocks that have a claim to a companies assets
- C is the cash
- cash and cash equivalents
Enterprise Value Definition
Enterprise value is a financial term used to describe the value of a company based on market cap, debt, minority interest, preferred shares, and cash.
How to calculate Enterprise Value?
How to calculate enterprise value?
- First, determine the market cap.
Calculate the total market capitalization of the company.
- Next, determine the total debt.
Measure the total debt owned by the company.
- Next, determine the minority interest.
Calculate the equity owned by the minority investors.
- Next, determine the preferred shares.
Measure the total number of preferred shares.
- Next, determine the cash.
Measure the cash and cash equivalents owned by the company.
- Finally, calculate the enterprise value.
Using the formula above, calculate the enterprise value.
FAQ
Enterprise value is a measure of the value of a company that goes further than just the market cap since it takes into account debt and other factors. It’s typically a better indicator of the “true” value of a company.
Enterprise value is typically used in the finance sector for determining good investments.
Simply use the calculator above.