Enterprise Value

Enterprise Value (EV) attemps to measure the value of a company's business rather than the company. It answers the question "what would it cost to buy this business free of its cash, debt and, other liablities".

The calculation:

1. Add to the market capitalisation of the company

2. the value of its debt financing (bonds and bank loans, not items such as trade creditors)

3. the value of other liabilities such as a deficit in the company's pension fund or provisions

4. and subtract the value of liquid assets such as cash and investments.