Enterprise Value
EV
Enterprise value is the true cost of acquiring the whole business. It adds the debt you would inherit to the market cap and subtracts the cash you would gain.
Formula
Enterprise Value
EV = Market Cap + Total Debt − Cash and Cash Equivalents
Benchmark: Low, zero, or negative EV is a prompt to investigate, not a buy signal
Reading the number
Think of buying a shop priced at ₹100. It has ₹20 of cash in the till and owes ₹10 to a friend. Your real cost is ₹100 − ₹20 + ₹10 = ₹90. That ₹90 is the enterprise value.
EV does two jobs. It prevents blunders, because a cheap-looking market cap can hide a mountain of debt. And it surfaces genuine bargains, because a company holding more cash than its market cap has a negative EV: you pay for the shop and get the till for free. Always check the consolidated figures. On research platforms, toggling between standalone and consolidated can flip EV dramatically, in one case from about −₹2,000 crore to about +₹1,200 crore.
Indian example
Related ratios
Glossary terms
From the research
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