Enter the market capitalization, minority interest, preferred shares, value of debt, and cash to calculate the enterprise value.
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.
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.