Enterprise Value (EV) Calculator

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).