Enterprise Value is the sum of a company’s latest market cap, total debt, and minority interest less cash short term investment at the end of the most recent financial year. Enterprise value (EV) is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization.

Enterprise value (EV) could be thought of like the theoretical takeover price if a company were to be bought. EV differs significantly from simple market capitalization in several ways, and many consider it to be a more accurate representation of a firm’s value. The value of a firm’s debt, for example, would need to be paid off by the buyer when taking over a company. As a result, enterprise value provides a much more accurate takeover valuation because it includes debt in its value calculation. It is used as the basis for many financial ratios that measure the performance of a company.