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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
A measure of a company's total value, including its stock price, debt, and cash. Think of it as the full takeover price.
Why It Matters
Enterprise Value (EV) gives a more complete picture than market cap alone. If a company has a $100B market cap but $50B in debt, the real cost to acquire it is $150B (minus any cash). EV is used in ratios like EV/EBITDA and EV/Revenue to compare companies with different debt levels on an apples-to-apples basis.
Key Points
- Calculate it: Market Cap + Total Debt - Cash and Cash Equivalents
- EV/EBITDA below 10 is often considered "cheap"; above 20 is "expensive" (varies by industry)
- Useful for comparing companies with different capital structures (heavy debt vs. debt-free)
Related Terms
Common Questions
A measure of a company's total value, including its stock price, debt, and cash. Think of it as the full takeover price. Enterprise Value (EV) gives a more complete picture than market cap alone. If a company has a $100B market cap but $50B in debt, the real cost to acquire it is $150B (minus any cash).
Enterprise Value (EV) gives a more complete picture than market cap alone. If a company has a $100B market cap but $50B in debt, the real cost to acquire it is $150B (minus any cash). EV is used in ratios like EV/EBITDA and EV/Revenue to compare companies with different debt levels on an apples-to-apples basis.
Calculate it: Market Cap + Total Debt - Cash and Cash Equivalents
EV/EBITDA below 10 is often considered "cheap"; above 20 is "expensive" (varies by industry)
Useful for comparing companies with different capital structures (heavy debt vs. debt-free)