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What is Enterprise Value?  Enterprise value is a comprehensive measure of a company’s value since it also includes the amount of cash, debt, and other items associated with a business.  Two firms could have the same market capitalization but wildy different enterprise values.  For example if one firm had $45 million in cash and no debt and the other firm had $125 million in debt and $20 million in cash, it would take more money to buy the second firm than the first firm because to buy the second firm you would not only have to pay for the stock (market cap), but the debt as well.

Here is the basic formula to calculate enterprise value:

Enterprise value =

common equity at equity value
+ debt at market value
+ minority interest at market value, if any
- associate company at market value, if any
+ preferred equity at market value
- cash and cash-equivalents.

How would you figure out ownership, valuation and equity for private companies?