Enterprise Value (EV) Calculator
Calculate Enterprise Value, EV/EBITDA, EV/Revenue, and EV/EBIT valuation multiples.
Understand why EV is better than market cap for comparing companies.
What Is Enterprise Value? Enterprise Value (EV) is the total economic value of a company — what it would cost to buy the entire business, including its debt. It is a more complete measure than market capitalization alone.
The Core Formula EV = Market Cap + Total Debt − Cash and Cash Equivalents
Where:
- Market Cap = Share Price × Shares Outstanding
- Total Debt = short-term debt + long-term debt
- Cash is subtracted because a buyer would immediately have access to it
Why Subtract Cash? If you buy a company and it has $100M in cash, that cash offsets the purchase price — you effectively get it back immediately. So cash reduces the true cost of acquiring the company.
Why Add Debt? When you acquire a company, you inherit its debt. A company with $500M market cap but $200M in debt costs you $700M to acquire (minus any cash). Market cap ignores this; EV does not.
EV vs Market Cap Example Company A: Market cap $1B, debt $500M, cash $100M → EV = $1.4B Company B: Market cap $1B, debt $0, cash $200M → EV = $0.8B Both have the same market cap, but Company B is actually cheaper to acquire.
Common EV Multiples
EV/EBITDA: Most common M&A valuation metric. Compares enterprise value to operating cash earnings.
- Below 8×: Potentially undervalued or distressed
- 8–15×: Fair value for most sectors
- Above 15×: Premium valuation (growth companies)
EV/Revenue: Used when EBITDA is negative (early-stage companies).
- SaaS/tech companies: often 5–15× or higher
- Mature businesses: typically 1–3×
EV/EBIT: Similar to EV/EBITDA but after depreciation — more conservative.
Why EV Matters in M&A Investment bankers and private equity firms use EV as the basis for deal pricing. It allows apples-to-apples comparison between companies with very different capital structures (some debt-heavy, some equity-heavy).