More accurate than Market Cap. Use our tools to bridge equity value to enterprise value by adjusting for debt, cash, and minority interest.
Equity to Enterprise Value Walk
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Create your first valuation or explore the EV guide below.
Market Cap tells you what the equity is worth.
Enterprise Value tells you the price tag to take over the whole company.
Imagine you want to buy a house. The seller asks for $500,000. This is the "Equity Value" or Market Cap.
However, the house comes with a $200,000 mortgage attached to it. As the new owner, you must assume this debt.
But, inside the house, you find a safe containing $50,000 in cash. You can use this cash immediately to pay down part of the debt.
Buyers don't just buy shares; they must refinance the debt. EV represents the true "Takeover Price" required to acquire 100% of the business.
Market Cap ignores capital structure. EV neutralizes the difference between companies that use a lot of debt vs. those that use only equity.
A stock might look cheap (low P/E ratio), but if it has massive debt, the Enterprise Value will be huge, revealing the true risk.
*Note: Enterprise Value is theoretically independent of capital structure changes (Miller-Modigliani theorem), but in practice, debt adds risk and cost.
