EVEnterprise Value
The total theoretical takeover price of a company — market cap plus debt, minus cash. What you'd actually pay to buy the entire business.
Formula
EV = Market Cap + Total Debt − Cash & Equivalents
How to Interpret
EV is more accurate than market cap for comparing companies because it accounts for debt. A company with $10B market cap and $5B in debt is more expensive than one with $10B market cap and $5B in cash, even though they have the same market cap.
Why It Matters
Used in EV/EBITDA and EV/Revenue ratios, which are the standard for M&A valuations. When someone says "Company X was acquired for 10x revenue," they usually mean EV/Revenue.