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What is the difference between “Equity Value” and “Enterprise Value”?

What is the difference between “Equity Value” and “Enterprise Value”?

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Chris Ho
 

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The equity value is defined simply as the total value of all outstanding stock for the company. Since the ownership of a public company lies in its outstanding shares, the theoretical price to buy the entire company would be the price of a single share of stock multiplied by the number of shares currently outstanding.

The enterprise value calculates what the company is worth net of the amount of cash and debt that the company has on its balance sheet. This is important to look at since, if anyone were to actually buy an entire company, they inherit both the cash and the debt of the company.

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