Enterprise Value Calculator

Inputs you need to gather

To run the Enterprise Value model, you will need to gather the following financial values from the company's latest balance sheet and market data:

• Market Capitalization: The total value of common shares outstanding. For public companies, this is the share price multiplied by total shares; for private companies, this is the assessed equity valuation.
• Total Debt: The sum of short-term and long-term interest-bearing debt liabilities on the balance sheet.
• Cash & Cash Equivalents: The cash, bank deposits, and highly liquid short-term investments held by the firm.
• Preferred Stock (optional): The market value or book value of outstanding preferred shares.
• Minority Interest (optional): The non-controlling interest in subsidiaries that is consolidated on the balance sheet.

Interpreting the valuation outputs

Once computed, the tool outputs the Enterprise Value (EV) and the Net Debt.

The stacked bar visualizer details the composition of the company's value, showing how much of the EV is funded by equity (Market Cap) versus debt and other claims. The cash deduction segment shows how the company's liquid holdings reduce the net cost of acquisition. The sensitivity grid shows how the EV shifts as debt levels and cash holdings change.

Example inputs

Let's calculate the Enterprise Value for a mid-sized technology corporation with the following balance sheet metrics:

• Market Capitalization = $10,000,000
• Total Debt = $3,000,000
• Cash & Cash Equivalents = $1,500,000
• Preferred Stock = $0
• Minority Interest = $200,000

Step-by-step execution

Step 1: Calculate the total additions to value: Equity ($10,000,000) + Debt ($3,000,000) + Preferred ($0) + Minority ($200,000) = $13,200,000.

Step 2: Subtract cash and cash equivalents: $13,200,000 - Cash ($1,500,000) = $11,700,000.

Step 3: Calculate Net Debt: Debt ($3,000,000) - Cash ($1,500,000) = $1,500,000. The net economic cost of acquiring this business is $11,700,000, with $1,500,000 in net debt assumed by the acquirer.

What is Equity Value?

Equity Value represents the total value of the company that is owned by its shareholders. It is the value that remains after all debts and other liabilities have been paid off. For public companies, Equity Value is equal to the market capitalization.

What is Enterprise Value?

Enterprise Value represents the total value of the company's operations, regardless of how those operations are financed (whether through equity or debt). It reflects the value of the entire business entity, making it the standard metric used in acquisitions and buyouts.

How they relate in DCF models

In a Discounted Cash Flow model, discounting Free Cash Flows to the Firm (FCFF) yields the Enterprise Value. To find the Equity Value, you must subtract Net Debt, Preferred Stock, and Minority Interest from the calculated EV. This is a critical step in determining the per-share value of common stock.

Using book value instead of market value

A frequent mistake is using the book value of equity from the balance sheet instead of the market capitalization. Since book values reflect historical accounting allocations, they do not represent the current market value of the company's shares. Always use current market equity value for public firms.