Enterprise Value vs Equity Value

Updated: Oct 17, 2020

Enterprise value (EV)

The enterprise value (which is also called asset value or firm value) is the total value of the assets of the business excluding cash.

EV informs how much a business is worth, which is valuable in comparing firms with different capital structures (is the particular combination of debt and equity used by a company to finance its overall operations and growth) since the capital structure doesn't influence the value of a firm.

EV = (share price x no. of shares) + total debt – cash

Equity Value

The equity value (or net asset value) is the value that remains for the shareholders after all debts (long-term debt and short-term debt) have been paid off.

Equity value = Enterprise Value – total debt + cash
Equity value = No. of shares x share price

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