Enterprise Value (EV) Calculator
Calculate a company's Enterprise Value — the theoretical total acquisition cost — by combining market capitalization, debt, preferred stock, and minority interest, then subtracting cash.
How to use this tool
- Enter market capitalization, total debt, preferred stock, minority interest, cash & cash equivalents and ebitda (optional, for ev/ebitda) in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your enterprise value (ev) and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
EV = Market Cap + Total Debt + Preferred Stock + Minority Interest − Cash & Equivalents
A common valuation multiple derived from this is: EV/EBITDA = Enterprise Value ÷ EBITDA.
How it works
Enterprise Value represents the total cost to acquire a company, including the assumption of its debt and preferred obligations, minus any cash that would be received. Unlike market capitalization, which reflects only equity holders' claim, EV captures all sources of capital and is therefore a capital-structure-neutral measure useful for comparing companies with different debt levels. Net debt (total debt minus cash) measures the company's net financial leverage position.
Worked example
Mid-Cap Company Valuation
- Inputs: Market Cap = $500M, Debt = $100M, Preferred = $20M, Minority Interest = $10M, Cash = $50M
- EV = $500M + $100M + $20M + $10M − $50M
- EV = $580M
Enterprise Value = $580M. With EBITDA of $80M, the EV/EBITDA multiple = 580/80 = 7.25×.
Common mistakes to avoid
- Forgetting to include minority interest in the EV calculation when the parent consolidates subsidiaries — minority interest represents a claim on consolidated assets not owned by the parent.
- Using market capitalization alone as an acquisition cost estimate and ignoring the acquirer's obligation to repay the target's net debt, which is exactly what EV corrects for.
- Subtracting all cash shown on the balance sheet without checking for restricted cash — restricted cash is not freely available to the acquirer and should not reduce EV.
Key terms
- What is Enterprise Value?
- Enterprise Value (EV) is the total theoretical cost to acquire a company, including equity (market cap), debt, preferred stock, and minority interest, less any cash the acquirer would receive. It is considered a more complete measure of a company's value than market cap alone.
- Why is cash subtracted in the EV formula?
- Cash is subtracted because an acquirer effectively 'gets it back' upon purchase — cash can immediately be used to repay debt or returned to the buyer, reducing the net cost of the acquisition.
- What is EV/EBITDA and why is it useful?
- EV/EBITDA is a valuation multiple comparing enterprise value to earnings before interest, taxes, depreciation, and amortization. It is capital-structure-neutral (unlike P/E), making it useful for comparing companies across industries and with different levels of debt.
- What is minority interest in the EV formula?
- Minority interest (or non-controlling interest) represents the portion of a subsidiary not owned by the parent company. It is added to EV because, to fully control the consolidated entity, an acquirer must also account for this obligation.
Frequently asked questions
- Why is cash subtracted in the enterprise value formula?
- An acquirer gains the target's cash at closing, effectively reducing the net acquisition cost. EV represents the value of the operating business, net of cash the buyer receives.
- Does enterprise value include operating leases?
- Under IFRS 16 and ASC 842, lease liabilities appear on the balance sheet and are often included in debt for EV purposes, especially for lease-heavy businesses like retailers.
- When is market cap a better valuation metric than EV?
- Market cap is more relevant for equity investors comparing per-share value. EV is preferred in M&A and when comparing companies with very different capital structures.