Enterprise Value (EV)
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. Related Terms:
Cash And Cash Equivalents
Debt
Enterprise Multiple
Enterprise-Value-To-Sales - EV/Sales
Equal Weight
Market Capitalization
Preferred Shares
Takeover
Total Enterprise Value - TEV |