Enterprise value (EV)

Also called: enterprise value, takeover value

The price to buy the whole business: you'd pay for the shares and take on its debt, but you'd also get its cash.

Formula

EV = Market cap + Total debt − Cash and short-term investments

Worked example

1. Market cap = $40.0bn
2. + Total debt = $5.0bn (long-term $4.0bn + short-term $1.0bn)
3. − Cash & short-term investments = $2.0bn

Result: $43.0bn

How to read it

EV is used instead of market cap when comparing companies with very different amounts of debt.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)