🔹 Meaning:
Enterprise Value represents the total value of a company, considering not just equity but also debt and cash.
🔹 Formula:
EV = Market Cap + Total Debt − Cash & Cash Equivalents
🔹 Why it matters:
EV shows what it would cost to acquire the entire business. It’s more accurate than market cap for comparing companies with different debt levels.
🔹 Example:
• Market Cap: ₹5,000 crore
• Total Debt: ₹1,500 crore
• Cash: ₹500 crore
👉 Enterprise Value = ₹6,000 crore
🔹 Investor Insight:
• 📉 Lower EV (relative to earnings) → Potentially attractive
• 📊 Used widely with EV/EBITDA for valuation comparisons
💡 FinTip:
Always compare EV-based ratios for capital-intensive sectors (infra, real estate, manufacturing).
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