Enterprise Value (EV)

Enterprise Value (EV) is a comprehensive measure of a company’s total market value, reflecting not just its equity but also its debt and cash positions. EV is widely used in valuation analyses, mergers and acquisitions (M&A), and comparative assessments of companies within and across industries.

Formula:

EV=MarketCapitalization+TotalDebt−CashandCashEquivalentsEV = Market Capitalization + Total Debt - Cash and Cash EquivalentsEV=MarketCapitalization+TotalDebt−CashandCashEquivalents

EV provides a clearer picture of a company's value than market capitalization alone, as it accounts for the impact of financial leverage and liquidity. It’s the standard denominator in valuation ratios like EV/EBITDA and EV/Revenue.