Enterprise Value

Definition

A company's total value including debt and excluding cash, representing what you'd pay to own it outright and settle all obligations. It's market cap's more sophisticated cousin that actually understands capital structure.

Example Usage

Despite identical market caps, Company A had twice the enterprise value due to its $5 billion debt load and minimal cash.

Origin

Became standard in M&A and valuation analysis in the late 20th century

Fun Fact

Enterprise value can actually be negative if a company has more cash than its market cap plus debt—which is either a screaming buy or a sign the business is worthless.

Source: Corporate valuation and M&A analysis

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