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 ?
Integrating risk management with strategy-setting, such as an enterprise risk management (ERM) approach, helps an organization manage its risks to protect and enhance enterprise value in three ways.
The Lincoln MMI is the only index that tracks changes in the enterprise value of US privately held middle market companies--primarily those owned by private equity firms.
CollabNet VersionOne is the Enterprise Value Stream Management leader that accelerates high value software development and delivery, while improving quality and reducing risk.
To divest up to 50 percent stake in two office assets in Udyog Vihar, Gurugram..., at an aggregate enterprise value of approximately Rs 464 crore".
The owner who seeks help in navigating this can significantly improve the chances of realizing enterprise value when transitioning from the business.
To study the effect of buyback of shares on enterprise value
In his response to Khan on April 30, also seen by Profit, DCL Director Haroon Iqbal wrote that Mega Conglomerate had indicated that the enterprise value would be around Rs24 billion, with a possible revision of Rs1 billion either upwards or downwards because of the due diligence exercise.
This transaction values Specialty Chemicals at 10.1 billion [euro] (enterprise value).
Marlowe plc the support services group focused on acquiring and developing companies that provide critical asset maintenance services, announces that it has acquired Island Fire Protection Limited (Island Fire") for a total enterprise value of up to 1.1 million.
Still, the trade name only accounts for an average of 4% of enterprise value. Depending on the background of the transaction (i.e., new territory or consolidation), the trade name of the acquired firm is assumed to be kept and maintained in 8 of the 18 cases.
The authors of the report ranked the clubs by enterprise value, an accounting measure used to assess how much it would cost to buy any given club or company, also taking into account its total debt.
(NYSE MKT:STRP) board of directors has determined that a revised offer from a multi-national telecommunications company (the "Bidder") to acquire 100% of the issued and outstanding shares of Straight Path for USD 135.96 per share (reflecting an enterprise value of approximately USD 2.3bn), which will be paid in Bidder stock in an all-stock transaction, constitutes a "Superior Proposal" as defined in Straight Path's definitive agreement and plan of merger with AT&T Inc.

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