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Calculating Enterprise Value

oboloo Glossary

Calculating Enterprise Value

Calculating Enterprise Value is an important concept that businesses use to measure the value of a company. In essence, it’s a way for investors and financial experts to determine how much money would be required to purchase a particular enterprise as a whole. To calculate Enterprise Value, one must first add up the fair market value of all assets owned by the company, including current assets like cash, investments, and inventory. Once these are tallied, you subtract the total liabilities associated with the enterprise to get its Equity Value. Finally, add in any non-cash assets such as goodwill, intangible assets, and other intangibles plus minority interest to arrive at the Enterprise Value. By understanding this concept and properly calculating Enterprise Value, companies have a better chance of accurately assessing their overall financial health.

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