Enterprise Value (EV) of a private company is a measure of the financial value of that company, including both debt and equity. It helps investors understand the “true” worth of the firm, based on current market conditions, rather than relying on book value or other outdated metrics. EV is determined by subtracting the total amount of debt from the total assets of the company. This is essentially the price a potential buyer would need to pay to acquire the company in its entirety. By carefully tracking EV, managers can make more informed decisions about capital investments and financing options, giving them the opportunity to maximize the value of their business over time.