Enterprise Value (EV)

Enterprise Value (EV) = Market Capitalization + Total Debt - Cash and Cash Equivalents. It's considered a more complete measure of a company's worth than market cap alone because it accounts for the debt an acquirer would need to take on and the cash they'd receive. Think of it as the true acquisition price.

EV is used as the numerator in popular valuation ratios like EV/EBITDA and EV/Revenue. A company with a $10B market cap but $5B in net debt has an EV of $15B — meaning a buyer would effectively pay $15B. Conversely, a company with $5B in net cash has an EV lower than its market cap.

Example: Amazon had a market cap of around $1.4 trillion in early 2024, but significant cash reserves and some debt. Its EV adjusts accordingly. This is why two companies with the same market cap can have very different enterprise values — and thus very different implied acquisition costs.

EV/EBITDA is one of the primary valuation tools featured in BMInsider's 100X Insider Reports, particularly for comparing companies within the same sector.