— Business & Valuation
Enterprise Value Calculator
Calculate enterprise value by bridging from market cap to the full takeover cost. Add debt, leases, minority interest, preferred stock, and subtract cash or investments, then see net debt and EV valuation multiples.
Enterprise value
$6,500
- Net debt
- $1,500
- Equity value (market cap)
- $5,000
- EV / EBITDA
- 8.13
- P / E
- 14.29
Try: Standard build, Diluted from shares, Net-cash company, Full claims bridge
— The equity-value → enterprise-value bridge
| Component | Amount | Running total |
|---|---|---|
| Market capitalisation (equity value) | $5,000 | $5,000 |
| Total debt | $2,000 | $7,000 |
| Cash & equivalents | $-500 | $6,500 |
| Enterprise value | $6,500 | $6,500 |
— The valuation multiples
| Multiple | Metric value | Multiple (×) |
|---|---|---|
| EV / EBITDA | $800 | 8.13 |
| EV / EBIT | $600 | 10.83 |
| EV / Revenue | $4,000 | 1.63 |
| P / E | $350 | 14.29 |
— From market cap to enterprise value
Download— How it works
Enterprise value = Market cap + Total debt − Cash + Minority interest + Preferred + Leases − Investments. Net debt = Total debt − Cash. Multiples: EV/EBITDA, EV/EBIT, EV/Revenue, and P/E = Market cap ÷ Net income.
Why enterprise value, not market cap
When you buy a company outright you don’t just pay its shareholders — you inherit its debts and you keep its cash. Enterprise value captures that: start from the market cap (the equity value), add the debt the business owes and any other senior claims, then subtract the cash, because that cash is yours once the deal closes. The result is the economic cost of the whole enterprise, independent of how it happens to be financed. That independence is the whole point. Two companies can have identical operations and identical market caps, but if one is loaded with debt and the other is debt-free, their true acquisition costs differ enormously — and only enterprise value shows it.
Worked example — market cap 5,000, debt 2,000, cash 500: Net debt = 2,000 − 500 = 1,500. Enterprise value = 5,000 + 2,000 − 500 = 6,500 — the bridge from equity value to EV.
The full bridge, and getting the share count right
Beyond debt and cash, a complete bridge adds the other claims an acquirer assumes — minority interest (the slice of a consolidated subsidiary the parent doesn’t own), preferred equity (senior to common), and, under IFRS 16, capitalised lease and underfunded-pension obligations — and subtracts investments in associates, which aren’t part of the core business. Equally important is the equity side: market cap should reflect diluted shares, not just basic ones. The treasury-stock method captures this — in-the-money options and warrants create new shares, partly offset by the cash the company collects on exercise, and convertibles add their if-converted shares. For a company with lots of employee options, ignoring dilution can understate the equity value, and therefore EV, by a meaningful margin.
The multiples, and why they’re the real prize
The reason analysts bother computing enterprise value is comparison. EV is the numerator of the multiples that let you value one company against its peers: EV/EBITDA (the headline, capital-structure-neutral), EV/EBIT (which accounts for differing capital intensity through depreciation), and EV/Revenue (useful for fast-growing or loss-making firms). Because EV already nets out debt and cash, these multiples compare cleanly across companies with different balance sheets — unlike the equity-only P/E ratio, which is distorted by leverage. The calculator computes all four side by side so you can benchmark against comparable companies or precedent transactions. Educational tool only — not investment advice; a multiple is only as meaningful as the peer set you compare it against.
— Reader questions
What is the difference between enterprise value and market cap?
Market cap is the value of a company’s equity — share price times shares outstanding. Enterprise value is the cost to acquire the entire business: market cap plus net debt and other claims (minority interest, preferred, leases) less investments. EV reflects what an acquirer actually pays once it assumes the debt and keeps the cash, so it’s the more complete measure of total value.
Why is cash subtracted in enterprise value?
Because an acquirer effectively gets the target’s cash back after the purchase — it can be used to repay debt or returned to the buyer. So the real economic cost of the business is reduced by the cash on its balance sheet. That’s why a cash-rich company can have an enterprise value below its market cap (a net-cash position).
What is net debt?
Net debt is total interest-bearing debt minus cash and equivalents — the debt a buyer effectively takes on after using the company’s own cash to offset it. A negative net debt means the company holds more cash than debt (a net-cash position), which lowers its enterprise value below its market cap.
Why use EV/EBITDA instead of the P/E ratio?
EV/EBITDA is capital-structure-neutral: because enterprise value already includes debt and EBITDA is measured before interest, the multiple compares companies fairly regardless of how much debt each carries. The P/E ratio uses equity value and after-interest earnings, so it’s distorted by leverage — two otherwise-identical companies with different debt levels will show different P/Es but similar EV/EBITDAs.
What is the treasury-stock method?
A way to count diluted shares from in-the-money options and warrants. It assumes the options are exercised and the company uses the cash it receives (options × strike price) to buy back shares at the market price. The net new shares are options × (1 − strike ÷ price), which are added to the basic share count for a more accurate market cap.