Enterprise Value (EV)
Definition
A measure of a company's total value including equity and debt, less cash. It reflects what it would cost to acquire the whole business and is used in multiples such as EV/EBITDA.
Formula
Enterprise value = Market capitalisation + Total debt − Cash and equivalents
Related Terms in Financial Analysis
EV/EBITDA
A valuation multiple comparing enterprise value to EBITDA, widely used to value businesses because it is unaffected by capital structure and non-cash charges. Lower multiples can indicate cheaper valuations.
Net Debt
A company's total debt less its cash and cash equivalents, showing the debt that would remain if available cash were used to pay it down. It is a cleaner gauge of leverage than gross debt.
Cash Flow Forecast
A projection of the cash expected to flow into and out of a business over a future period, used to anticipate shortfalls and surpluses and to plan financing and spending.
Sensitivity Analysis
Testing how a result — such as profit or a valuation — changes when one key assumption is varied, to see which assumptions matter most and how much risk they carry.
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