Valuation

Enterprise Value

Compares the market price with the market value of the business before allocating it between debt and equity or with an earnings, sales, cash -flow or book-value base. It does not say whether a company is good; it translates growth expectations, risk and profi

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Enterprise Value

enterpriseValue · Valuation
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Definition
Compares the market price with the market value of the business before allocating it between debt and equity or with an earnings, sales, cash-flow or book-value base. It does not say whether a company is good; it translates growth expectations, risk and profitability into a comparable number.
Calculation
Market capitalization in reporting currency + total debt + preferred equity + minority interest - cash.
Uses
Useful for comparing similar businesses and spotting gaps between price, quality and growth. Weak for cyclicals away from mid-cycle, banks with operating multiples, early biotech and companies without normalized profits. Cross-check DCF, own history, peers, FCF yield, ROIC and debt.
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