Enterprise Value


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Enterprise Value

The market capitalization of a firm's equity plus the market value of the firm's debt. Often the value of assets that are non-core are excluded from the final calculation.

Enterprise Value

The market value of a company if it were (hypothetically) to be taken over. It is calculated by adding its market capitalization to its debt, minority interest, and preferred equity at market value, then subtracting its cash or cash equivalents. This is an important aspect of business valuation and accounting.

Enterprise value.

A company's enterprise value is its worth as a functioning entity, or its acquisition cost.

You calculate enterprise value by adding a company's total long- and short-term debt to its market capitalization and subtracting its liquid assets, including cash, cash equivalents, and investments. In some formulas, preferred stock and minority interest in the company are included as debt while current accounts receivable and inventory are included as cash.

>From an investor's perspective, considering enterprise value as well as market cap and the customary ratios, such as price/earnings ratio (P/E) and earnings per share, can provide greater insight into the company's potential long-term worth.

>From a buyer's perspective, the more debt and the less cash a company has, the more expensive owning it will be, since the debts must be paid off and there's little cash to offset the interest. This reduces the price the acquirer is willing to pay.

References in periodicals archive ?
But enterprise value risk is rarely well managed because most private firms have less-than-robust boards and few senior managers even know their firm's enterprise value.
Enterprise Value Award entries are subjected to a rigorous judging process.
An ERM infrastructure supports strategy-setting, because it provides the discipline, focus and control by which management capitalizes on competitive strengths while protecting enterprise value.
The Enterprise Value Awards are bestowed on organizations that have created information technology (IT) systems that demonstrate benefits and return on investment (ROI) across the enterprise.
Existing shareholders will receive $150 million of common stock in the reorganized Company as a result of the $75 million reduction in the amount required under the Veil Piercing Settlement Agreement, and the $75 million increase in Negotiated Enterprise Value versus the Creditor Plan.
In analyzing recovery values for theater exhibitors, the distressed enterprise value analysis typically generates a higher value than the liquidation value analysis due to the exhibitor's limited asset base.
5 million (approximately US$61 million) for the participation, implying a total enterprise value for Dalmine Energie of [euro]79.
is a publicly traded partnership with an enterprise value of approximately $4 billion, which conducts business through various subsidiary operating companies.
is one of the largest publicly traded energy partnerships with an enterprise value of over $17 billion, and is a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil and petrochemicals.

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