Which one of these is the formula for computing enterprise value?
A)Price per share × Shares outstanding - Cash
B)Market capitalization + Market value of interest bearing debt - Cash
C)Market capitalization - Market value of interest bearing debt
D)Price per share × Shares outstanding
E)Market capitalization + Market value of all debt - Cash

Question

Quizplus · Accepted Answer

Enterprise value is the total value of a company's business operations, including both debt and equity. The market capitalization only accounts for the equity portion. Therefore, we need to add the market value of interest-bearing debt and subtract cash to arrive at the enterprise value. So, the formula for computing enterprise value is Market capitalization + Market value of interest bearing debt - Cash.

Which One of These Is the Formula for Computing Enterprise