Market cap to enterprise value (MC/EV) is a ratio used to evaluate a company’s financial health and overall worth. It compares the company’s market capitalization, which is calculated by multiplying the number of its outstanding shares by their current market price, to its enterprise value – which includes debt, preferred stock and other items that do not solely reflect a company’s equity value. The higher the ratio, the better it can be seen as an indicator of how much potential upside exists before investors are paying full price. A low MC/EV ratio can also indicate that a company is undervalued or simply facing challenges with profitability.