Enterprise Value Calculator
From market capitalisation, total debt and cash, compute the enterprise value (EV).
Input Data
Results
At a glance:Enterprise Value (EV) = market capitalisation + total debt − cash and cash equivalents. It measures the actual total price to acquire a whole company, more complete than equity market cap alone, because the acquirer inherits the debt but also receives the cash. Example: market cap HK$800M, total debt HK$200M, cash HK$50M → EV = 950M. EV is used in EV/EBITDA and EV/Sales multiples since it includes the capital structure (debt and cash) and compares companies fairly across leverage levels. A debt-heavy, low-cash firm has an EV above its market cap; a cash-rich, low-debt firm the reverse.
Formula
EV = Market cap + Total debt − Cash & equivalents.
$$\text{Enterprise Value} = \text{Market Cap} + \text{Total Debt} - \text{Cash \& Equivalents}$$How to Use
- Enter the market capitalisation (current share price × shares outstanding).
- Enter the company's total interest-bearing debt.
- Enter cash and equivalents, then view the enterprise value.
Three companies with the same HK$1,000M market cap but different debt/cash show how capital structure moves EV
| Market cap (HK$) | Total debt (HK$) | Cash (HK$) | EV (HK$) |
|---|---|---|---|
| 1,000M | 0 | 200M | 800M |
| 1,000M | 200M | 50M | 1,150M |
| 1,000M | 500M | 50M | 1,450M |
| 1,000M | 500M | 300M | 1,200M |
Case Studies
Case 1: Same market cap, different acquisition cost
Two firms both HK$1,000M market cap. A has no debt and HK$200M cash; B has HK$500M debt and only HK$50M cash.
A's EV = 1,000 + 0 − 200 = 800M; B's EV = 1,000 + 500 − 50 = 1,450M. Same equity value, but buying A really costs 800M (you get its 200M cash), buying B costs 1,450M (you inherit 500M debt). EV reflects the true cost far better than market cap.
Case 2: EV/EBITDA valuation comparison
Analyst compares a company: EV = 950M, annual EBITDA = 100M.
EV/EBITDA = 950 ÷ 100 = 9.5×. This multiple counts the capital structure (EV includes debt and cash) and strips depreciation/amortisation differences, so it compares peers fairly across leverage and depreciation policies. If the peer average EV/EBITDA is 12×, this 9.5× looks relatively low (possibly undervalued) and worth more research.
FAQ
What is the difference between enterprise value and market cap?
Market cap reflects only the market value of equity (price × shares). EV adds debt and subtracts cash, reflecting the actual total price to acquire the whole company including its liabilities and cash. Two companies with the same market cap but one debt-free and cash-rich, the other highly levered and cash-poor, will have very different EVs. For valuation comparison (especially M&A), EV is fairer because it accounts for capital-structure differences.
Why subtract cash when computing EV?
Because after acquiring a company, the cash on its books belongs to you immediately and can be used to pay down part of the acquisition cost or the company's debt, lowering the real outlay. Example: buying a company for HK$1B that holds HK$100M cash means the net cost is really HK$900M. So cash is deducted from market cap plus debt to reflect the true acquisition burden.
Can enterprise value be negative?
In theory yes. When a company's cash exceeds 'market cap + total debt', EV turns negative. This is rare, usually when market cap is severely undervalued or cash is huge but the business outlook is pessimistic. Negative EV means the market prices the company below its net cash — sometimes seen by value investors as a potential opportunity, but it may also reflect worries about cash use or future losses; analyse carefully.
Why is EV fairer than market cap for comparison?
Market cap counts only equity; EV adds debt and subtracts cash, i.e. the real cost to buy the whole business (with its debt and cash). Imagine buying a company: you pay for all shares (market cap), then inherit its debt (add debt) but also receive its cash (subtract cash). So EV reflects 'the true cost of buying the whole business' while market cap reflects only 'equity value'. That is why two firms with the same market cap can have very different acquisition costs — high-debt, low-cash firms have EV far above market cap; cash-rich, debt-free firms have EV below. In M&A and cross-company comparison (e.g. EV/EBITDA), EV is fairer and more common because it already includes the capital structure.
Can EV be negative, and what does it imply?
EV can be negative in theory but extremely rarely: when cash (plus equivalents) exceeds 'market cap + total debt', EV goes negative, meaning the market values the whole company below its net cash — you could in theory buy it and the net cash alone exceeds your cost. This typically appears when the market is deeply pessimistic, the company is burning cash (fear it runs out), or there are undisclosed liabilities/litigation. A negative EV is sometimes read by value investors as a possible bargain, but more often a warning; do not conclude 'undervalued' from the number alone — study the reason.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.