Enterprise Value Calculator

What is Enterprise Value (EV)?

Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization. It represents the theoretical takeover price if a company were to be bought, as it considers both equity and debt while accounting for available cash.

The Enterprise Value Formula

Standard Formula

EV = Market Capitalization + Total Debt - Cash and Cash Equivalents

Expanded Formula

EV = Market Cap + Total Debt + Preferred Stock + Minority Interest - Cash

Where:

• Market Capitalization = Stock Price × Shares Outstanding
• Total Debt = Short-term + Long-term debt
• Cash and Cash Equivalents = Cash, marketable securities, short-term investments
• Preferred Stock = Value of preferred shares (if any)
• Minority Interest = Non-controlling interests in subsidiaries

How to Use This Calculator

1. Select your calculation mode (Enterprise Value, Market Cap, or Required Cash)
2. Enter the stock price and shares outstanding (or market cap directly)
3. Enter the company's total debt
4. Enter cash and equivalents
5. Optionally add preferred stock and minority interest
6. View your Enterprise Value result and breakdown

Interpreting Enterprise Value

EV/EBITDA Benchmarks by Industry

When to Use Enterprise Value

• M&A Analysis: Determine acquisition price including debt assumption
• Company Comparison: Compare companies with different capital structures
• Valuation Multiples: Calculate EV/EBITDA, EV/Sales, EV/EBIT
• Investment Analysis: Assess if a company is over/undervalued

EV vs Market Capitalization

Enterprise Value

• Includes debt and subtracts cash
• Better for acquisition analysis
• Capital structure neutral
• More comprehensive valuation

Market Capitalization

• Only considers equity value
• Simpler to calculate
• Ignores debt obligations
• Depends on capital structure

Limitations of Enterprise Value

1. Market Volatility: Stock price fluctuations affect EV daily
2. Debt Complexity: Operating leases, pension liabilities may not be included
3. Cash Quality: Not all cash may be available (restricted cash)
4. Industry Differences: EV multiples vary significantly by sector
5. Point-in-Time: Represents a snapshot, not future potential

Frequently Asked Questions

Why subtract cash from Enterprise Value?

Cash is subtracted because an acquirer gains access to the target's cash, which can be used to pay down the assumed debt, effectively reducing the net cost of acquisition.

What's a good EV/EBITDA ratio?

A "good" ratio depends on industry and growth expectations. Generally, 8-12x is considered average, below 8x may indicate undervaluation, and above 15x may indicate overvaluation or high growth.

How does debt affect Enterprise Value?

Higher debt increases EV because an acquirer must assume these obligations. A highly leveraged company will have a higher EV relative to its market cap.

Note: This calculator provides estimates for educational and analysis purposes. Actual enterprise values may differ based on comprehensive financial analysis. Consult a financial advisor for investment decisions.