Enterprise Value (EV): Definition and Formula
Enterprise value is the total value of a company including debt and excluding cash. It is used in enterprise-value-based multiples such as EV/EBITDA.
Common formula
Where MarketCap is share price times shares outstanding. See Market Cap for more on share-count adjustments.
Usage
- EV is used with operating metrics (e.g., EV/EBITDA, EV/FCF) to compare firms regardless of leverage.
- Confirm whether datasets use basic, diluted or float-adjusted shares when computing market cap.
- Adjust for non-operating assets or liabilities to get an apples-to-apples comparison across peers.