Enterprise value (EV)

EV is a measure of a company's total value. EV includes in

its calculation the market capitalization of a company and
also short-term and long-term debt as well as any cash on
the company's balance sheet.
For instance, Company A has P 60 million in market cap, P 20
million in cash, and carries no debt. Company B, on the
other hand, also has P 60 million in market cap, but has no
cash, and carries P 30 million of debt.

Company A’s EV = P 60M – P20M

= P 40M

Company B’s EV = P 60M + P30M

= P 90M
If Better Buys Inc. has 500,000 outstanding shares trading at $10 per share, what
is its enterprise value?
= $ 11,251,000

= (500,000 * $10) + $6,875,000 - $ 624,000