Enterprise Value
Enterprise Value (EV) is a comprehensive metric that helps assess the total value of a company, often used in mergers and acquisitions. It represents the cost of acquiring a company, as it includes not only the market capitalization but also the company’s debt and cash positions. EV is considered a more accurate measure of a company’s value than market capitalization alone, as it accounts for the debt a company has taken on. Formula to calculate Enterprise Value: - EV = Market Capitalization + Net Debt. - EV = Market Capitalization + Debt - Cash. EV is useful for comparing companies with different capital structures.
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