Enterprise value

Enterprise value (EV) is the total value of a firm's operations to all capital providers, calculated as market capitalisation plus net debt; it represents what it would cost to acquire the whole business free of its financing.

ByHoang TruongUpdated June 30, 2026

FrameworkDCF valuation

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Meridian Foods plc has a market capitalisation of €420 million, long-term debt of €150 million and cash of €30 million, giving net debt of €120 million. Enterprise value equals market cap plus net debt: €420m plus €120m is €540 million, the cost of acquiring the whole business, whichever way it happens to be financed.

Where it fits

SubjectCorporate FinanceCoreTopicBusiness Valuation & DCFCore

The formula

LaTeX

EV = Mkt_{cap} + D_{net}

Variables

$M a r k e t c a p$: market capitalisation (shares outstanding × share price) (€)
$N e t d e b t$: interest-bearing debt minus cash and cash equivalents (€)

Enterprise value is capital-structure neutral: it represents the cost of acquiring the whole business and repaying all net debt.

LaTeX

D_{net} = D_{IB} - Cash

Variables

$I n t er es t - b e a r in g d e b t$: all financial borrowings (bonds, bank loans, leases) (€)
$C a s han d c a s h e q u i v a l e n t s$: cash and highly liquid short-term investments (€)

Check yourself

PracticeCORE

Meridian Retail plc has a market capitalisation of €320 million, short-term borrowings of €30 million, long-term debt of €90 million, and cash and cash equivalents of €25 million. What is Meridian's enterprise value?

Select an answer to check your understanding.