Enterprise & Equity Value
Should you ever use the BOOK value of debt or the MARKET value of debt in the EV bridge? Same question for equity.
Model answer
For equity, always use MARKET value (share price x diluted shares) - book equity is an accounting figure unrelated to value. For debt, theoretically market value is correct, but in practice book…
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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?
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