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Enterprise Value (EV) Calculator

Enter market cap, total debt and cash to get enterprise value and net debt.

How it is calculated

Enterprise value converts the price of the shares into the price of the whole business:

EV = market cap + total debt − cash and equivalents
net debt = total debt − cash

Market capitalization is the share price times shares outstanding. Total debt is what the company owes lenders, and cash includes cash equivalents that can be used right away. All three figures must be in the same currency and the same unit (all in thousands or all in millions, for example). Market cap must be above 0, and debt and cash cannot be negative; if you leave debt or cash empty, each counts as 0. Net debt is negative when cash exceeds debt, which means the business holds more cash than it owes.

Worked example

A company has a market cap of 5,000,000, total debt of 1,200,000 and cash of 350,000. Net debt = 1,200,000 − 350,000 = 850,000. Enterprise value = 5,000,000 + 850,000 = $5,850,000.00. A buyer would therefore pay about 5.85 million for the whole business, not just the 5 million of its shares, because it also takes on the net debt.

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Common mistakes

  • Subtracting debt instead of adding it. The debt is taken on by the buyer and increases the cost; only cash is subtracted.
  • Entering net debt in the debt field and cash again in the cash field. That subtracts the cash twice. Enter gross total debt and the cash balance separately, or net debt alone with cash left empty.
  • Mixing units, for example market cap in millions and debt in thousands. All inputs must share one unit, or the EV is meaningless.
  • Using the book value of equity instead of the market cap. EV is built on the current market value of the shares.
  • Leaving out items that count as debt in practice, such as leases or preferred stock, or counting restricted cash as free cash. The tool adds only the two numbers you provide.

Sources

About this calculator

Enterprise value (EV) represents the theoretical price a buyer would pay to acquire an entire company outright: EV = Market Capitalization + Total Debt − Cash and Equivalents. Debt is added because an acquirer would have to assume or repay it, and cash is subtracted because the buyer could immediately use the target's own cash to help fund the purchase.

Investment bankers and M&A analysts use EV instead of market cap whenever comparing companies with very different debt loads, since two firms with identical market caps can have wildly different total takeover costs. It's also the numerator in valuation multiples like EV/EBITDA and EV/Revenue, which are considered more reliable than price-to-earnings for comparing companies across different capital structures.

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Comments (1)

  • Editorial team

    Enterprise value is the figure to use when comparing companies with different amounts of debt, for example as the top of an EV to EBITDA ratio, while price to earnings pairs with market cap. The tool does not stop the result going negative: if cash exceeds market cap plus debt, EV comes out below zero. Which debt items do you include in total debt, leases and pensions among them?

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