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Enterprise Value is absolutely not the “value” of the company. The Enterprise value is the actual amount a company will cost you if you buy it at Market Cap. I
by addicted 7y ago
Enterprise Value is absolutely not the “value” of the company. The Enterprise value is the actual amount a company will cost you if you buy it at Market Cap.
IOW, if you buy a company for a $100bn but it has liabilities of another $100bn that means it’s cost to you is actually $200bn, because you will also have to pay that additional $100bn. That’s why cash reduces the EV of a company, because if you pay $100bn for a company that has $50bn in cash, you effectively paid only $50bn (which is the EV).
Market cap is the value of a company.
- MrPowers 7y agoMarket cap is the market value of a company's equity. market_cap = total_shares_outstanding * share_price I passed all three CFA exams a few years back and studied this extensively. I might be remembering incorrectly, but think you're making factually incorrect statements. Appreciate your comment and the motivation to think about this more. I recommend reading up on these terms: * market value of equity * book value of equity * intrinsic value of equity
- deleted 7y ago[deleted]