Glossary
Enterprise value
Enterprise value is the total value of a business as a whole, independent of how it is financed. It equals the value of the equity plus net debt. Enterprise value represents what it would cost to own the entire operating business, which is why it is a common basis for valuing and comparing companies.
Last updated
Enterprise value differs from equity value because it accounts for a company's debt and cash. Two businesses with the same equity value are not equally valuable as whole enterprises if one carries heavy debt and the other holds cash, and enterprise value captures that difference. It gives a fuller picture of the business as a single, self-contained operation.
As a neutral measure, enterprise value is one way to describe the scale and worth of a business as a whole. For anyone thinking about the long-term health of a company, it is a helpful frame for understanding the enterprise in its entirety rather than just the equity slice of it.