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What is enterprise value?

Enterprise value (EV) is the total value of the firm, reflecting the market value of the entire business. EV is calculated as under:

Market Capitalisation

Add: Debt (secured and unsecured)

Add: Minority Interest

Add: Preference share capital

Less: Cash and cash equivalents

E.g.: If the market cap of company is Rs. 100 crore, it had debt of Rs. 40 crore and cash and bank balance of Rs. 10 crore, then the enterprise value is calculated as:

EV = 100 + 40 10 crore

= Rs. 130 crore

Source: sptulsian.com

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