Equity value

Equity value is the portion of a firm's total value attributable to ordinary shareholders, found by subtracting net debt from enterprise value; dividing by shares outstanding gives an implied intrinsic share price.

ByHoang TruongUpdated June 30, 2026

FrameworkDCF valuation

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SolarTech GmbH has an enterprise value of €900 million and net debt of €150 million, leaving an equity value of €750 million. Dividing that by 10 million shares outstanding gives an intrinsic value of €75 a share. Against a market price of €70, the model implies the shares are undervalued.

Where it fits

SubjectCorporate FinanceAdvancedTopicBusiness Valuation & DCFAdvanced

The formula

LaTeX

E = EV - D_{net}

Variables

$E V$: enterprise value (€)
$N e t d e b t$: interest-bearing debt minus cash and cash equivalents (€)

Other claims ranking above ordinary equity — unfunded pension deficits, preferred shares — are also deducted if material.

LaTeX

P = \frac{E}{n_{shares}}

Variables

$E q u i t y v a l u e$: total value attributable to ordinary shareholders (€)
$S ha r eso u t s t an d in g$: total number of ordinary shares in issue (shares)

Check yourself

PracticeCORE

An analyst's DCF model produces an enterprise value of €750 million for BioNex GmbH. The firm has long-term debt of €180 million, preferred shares valued at €20 million, and cash of €35 million. What is the equity value attributable to ordinary shareholders?

Select an answer to check your understanding.