Enterprise Value (EV)

What it is\nEnterprise Value answers: "If I bought every share AND assumed every dollar of debt AND collected every dollar of cash, what would the business actually cost me?"\n\n## Why market cap alone misleads\nTwo companies with the same market cap can be very differently priced once you fold in debt. A company at $1B market cap with $5B of debt costs you $6B to acquire (less the cash). Headlines that say "X has a $20B market cap" without accounting for debt are giving you an incomplete picture.\n\n## When you'll see it\n- EV/EBIT, EV/EBITDA, EV/Revenue — every "EV/" multiple uses this number as the numerator\n- M&A press releases ("acquired for an enterprise value of $X billion")\n- Activist letters — they argue about share price relative to enterprise value, not just market cap\n\n## Pitfalls\n- Operating leases (post-2019 accounting) now show as debt — older comparisons may understate EV\n- Cross-holdings and minority interests need to be added back too for cleanliness