Enterprise value.

In plain English

Enterprise value starts with market capitalization, adds net debt, and often adds any minority interest and preferred stock. The idea is that buying a company means taking on its debts and getting its cash, so the equity price alone understates the cost. Enterprise value is the denominator-friendly figure used in multiples such as EV/EBITDA because it matches a profit measure calculated before interest. Two companies with the same market capitalization can have very different enterprise values if one is loaded with debt. It is a valuation construct, not a number that appears in any filing.

01Why it matters

Market capitalization only prices the equity, so comparing companies on it alone quietly ignores the debt a buyer would inherit along with the business.

02The math, step by step

Market capitalization is $3 billion, total debt is $900 million, and cash is $200 million. $3 billion plus $900 million minus $200 million gives an enterprise value of $3.7 billion.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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