Market cap = number of shares * price per share Enterprise value = market cap + debt The thinking is that to buy the company you need to buy the equity and th

Market cap = number of shares * price per share Enterprise value = market cap + debt The thinking is that to buy the company you need to buy the equity and then retire the debt, therefore when a company takes on more debt this increases enterprise value. Another way to think about it is the liability side of the balance sheet. You make $20 in debt and $30 in equity so your total liability is $50. Then market cap = 30 and enterprise value = 50. > Many of the big US car makers, apparently, pay pensions from their own balance sheets. No, pensions are paid out of pension funds, which is an off-balance sheet liability. The only way it kinda indirectly would show up on the balance sheet is if the automaker got sued for underfunding their pension fund and had to issue some debt to make up the shortfall.