Valuation

Enterprise Value (EV)

Market cap plus debt minus cash: roughly what it would cost to buy the whole company, including paying off its debt.

Why does it matter?

It compares companies with different amounts of debt more evenly than market cap alone.

How do I read it?

It is often divided by EBITDA (EV/EBITDA) or by revenue to compare companies. Two companies with the same market cap can have very different enterprise values if one has much more debt.

Example

Market cap of $50 billion + debt of $10 billion − cash of $4 billion = enterprise value of $56 billion.