Enterprise Value £m

What does EV £m mean?

Enterprise Value (EV) represents Market Capitalization plus Net Debt, and is a truer reflection of the actual size of a company than Market Cap. More specifically Net Debt includes Total Debt, Minority Interest and Preferred Stock minus Cash and Equivalents.

This Enterprise Value is based on the latest available figures for Debt & Cash, i.e. interim figures if these have been published since the annuals.

Stockopedia explains EV £m...

• If EV < Market Cap, the company has net cash.
• If EV > Market Cap, the company has net debt.
• If EV < 0, there is more cash in the company than the value of the Mkt Cap and Debt combined! This signal is often appreciated by deep value investors.

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Because EV is a capital structure-neutral metric, it is useful when comparing companies with diverse capital structures. In contrast, the PE Ratio will be significantly more volatile in companies that are highly leveraged.