Enterprise Value
September 2018
Many people do not realize that equity value is different from enterprise value. Equity value is mainly multiplying the number of shares outstanding by the value per share. Enterprise value is what the total enterprise is worth. In order to get that you have to add in the long-term debt plus the equity value and subtract out any cash. The reason for this is that if you were to buy a company you have to pay the debt holders and you have to pay the shareholders too. You also get the cash on the balance sheet.