How do you read Enterprise value (EV)?

Two companies with the same market cap can have very different enterprise values if one of them owes a lot. It means nothing for a bank, whose deposits are its raw material rather than its borrowing, so it is not shown for banks.

Enterprise value (EV)

Valuation

What the whole company would cost a buyer: its shares plus its debt, less its cash.

How it is worked out

Market cap plus total debt without operating leases, less cash and short-term investments.

How to read it

Two companies with the same market cap can have very different enterprise values if one of them owes a lot.
It means nothing for a bank, whose deposits are its raw material rather than its borrowing, so it is not shown for banks.

Example

Market cap $5bn, debt $2bn, cash $0.5bn: an enterprise value of $6.5bn.

Related terms

The other pages on US stocks, free to read. On the company pages, the last three fiscal years are open to everyone, five with a free account, and every year with Ploutos Investor.

US stocksThe market today, the sectors, the largest companies and the week's results.The market's sectorsThe 11 sectors side by side: returns, share of the market, median P/E and dividend.Compare stocksTwo companies side by side: price over up to ten years, with and without dividends, and every figure.US dividend stocksEach dividend's yield next to whether the company's cash covers it and whether it was ever cut.

Explanations of terms for learning, with examples from SEC filings.