From market cap to enterprise value
It is tempting to think a company’s worth is just its market cap — the value of all its shares. But share price only reflects the slice owned by equity holders. A would-be acquirer inherits everything: the bondholders and bank lenders must be paid (so debt is added), preferred shareholders and outside owners of subsidiaries have claims too (sopreferred stock and minority interest are added), and anycash on the balance sheet effectively reduces the bill (so it is subtracted). Walking through that bridge converts equity value into the cost of the whole enterprise, which is why this measure underpins deals and valuation comparisons alike. Start from a clean equity figure with themarket cap calculatorif you need it.
The enterprise value formula
EV = Market cap + Debt + Preferred + Minority interest − Cash
where Market cap = share price × shares outstanding,Debt is total interest-bearing borrowings, Preferred is preferred stock, Minority interest is the portion of consolidated subsidiaries owned by others, and Cash includes cash and equivalents. The combined adjustment of debt minus cash is known asnet debt, the single step that moves you from market cap to EV.
What makes this calculator different
- The full market-cap-to-EV bridge. Rather than a single black-box number, it walks through every line — market cap, debt, preferred, minority interest, and cash — so you see exactly how equity value becomes enterprise value.
- Net debt surfaced explicitly. Debt minus cash is broken out on its own, because net debt is the concept that does the real work in the bridge and the number analysts quote most often.
- It sets up EV multiples. Enterprise value is rarely the end of the analysis — it is the numerator of ratios like EV/EBITDA. This calculator gives you the clean EV that feeds straight into theEV/EBITDA calculator.
Frequently asked questions
What is enterprise value?+
Enterprise value (EV) is the total cost of acquiring an entire business, not just its equity. It starts from market capitalization — the value of all shares — and then adds the claims of other capital providers (debt, preferred stock, and minority interest) before subtracting cash. The result answers a simple question: if you bought the whole company outright, what would it really cost you? Because it captures the entire capital structure, EV is the figure that mergers, acquisitions, and valuation multiples are built on.
Why do you add debt and subtract cash?+
When you buy a business, you do not just buy its equity — you inherit its debt as well. A buyer must either repay that debt or keep servicing it, so it is a real part of the acquisition cost and gets added on. Cash works the opposite way: the buyer keeps any cash sitting on the balance sheet and can use it to offset the purchase price, so it is subtracted. The intuition is that you would happily pay more for a company that comes with a pile of cash and less for one saddled with borrowings.
What is the difference between enterprise value and market cap?+
Market capitalization measures only the equity — share price multiplied by shares outstanding — so it reflects what the stockholders own. Enterprise value broadens the lens to every provider of capital by adding debt, preferred stock, and minority interest, then netting out cash. Two companies can have identical market caps yet very different enterprise values if one is debt-heavy and the other is cash-rich. Market cap tells you what the equity is worth; EV tells you what the whole operating business is worth.
What is net debt?+
Net debt is total debt minus cash and cash equivalents. It strips out the cash a company could immediately use to pay down its borrowings, leaving the borrowing that genuinely weighs on the business. In the enterprise value bridge, net debt is exactly the adjustment that moves you from market cap to EV (alongside preferred stock and minority interest). A company with more cash than debt has negative net debt, which means its enterprise value is actually lower than its market cap.
Why do analysts prefer EV multiples over price multiples?+
Price-based multiples like the P/E ratio are distorted by capital structure, because a company financed with debt and one financed with equity will show different earnings per share even if their operations are identical. Enterprise value multiples such as EV/EBITDA sit above the capital structure: they compare the value of the whole business to a pre-interest measure of its earnings, so leverage washes out. That makes EV multiples capital-structure-neutral and far better for comparing companies with different mixes of debt and equity. It is why EV/EBITDA is a workhorse of comparable-company analysis.
Disclaimer: This calculator is foreducation and illustration only. Enterprise value depends on accurate, up-to-date balance-sheet figures, and conventions vary on what to include (operating leases, pensions, and similar items). Its output is not a valuation opinion or a fair price for any company. Nothing here is investment, tax, or trading advice.