Enterprise & Equity Value
If a company holds $0 debt but has a large cash balance and minority investments, can its enterprise value be LOWER than its equity value? Walk through it.
Model answer
Yes. With no debt and no preferred or minority interest, EV = Equity Value - Cash - Investments. Since cash and investments are subtracted, EV falls below equity value - this is common for cash-rich,…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from Enterprise & Equity Value
- What's the difference between enterprise value and equity value?
- Why do you subtract cash when going from equity value to enterprise value?
- Why is enterprise value capital-structure neutral but equity value is not?
- A company issues $100 of new debt and holds the cash on its balance sheet. What happens to EV and equity value?
- Which valuation multiples pair with enterprise value vs. equity value, and why?
- How do you calculate fully diluted shares?