Enterprise value (EV) is what it would cost to buy the entire business, not just its shares. It starts from market cap, then adds the company's debt and subtracts its cash — because a buyer inherits the debts but also gets the cash pile.
EV starts from market capitalization (share price × shares outstanding), then adds debt and subtracts cash. Example (illustrative): a company with a $100bn market cap, $20bn of debt, and $10bn of cash has an enterprise value of 100 + 20 − 10 = $110bn. Two companies can share the same market cap yet have very different enterprise values if one is loaded with debt and the other is sitting on cash.
Live example unavailable right now — open any ticker page's Fundamentals card for a current EV/EBITDA reading.
EV is most often the top of the EV/EBITDA ratio, where EBITDA is earnings before interest, taxes, depreciation, and amortization — a rough proxy for the cash operations throw off. Because EV already accounts for debt and cash, EV/EBITDA compares two companies fairly even when they finance themselves very differently — something the P/E ratio, which looks only at the equity, can't do.
Market cap is only the value of the shares. Enterprise value adds debt and subtracts cash, reflecting the true cost of acquiring the whole business — two firms with the same market cap can have very different enterprise values.
Because EV already accounts for debt and cash, EV/EBITDA compares companies fairly even when they carry very different debt. P/E looks only at the equity, so it can mislead across different financing.
EBITDA ignores real costs — interest, taxes, and depreciation — so a capital-heavy business can look cheap on it. It's one input among several, not a standalone signal.
Browse all S&P 500 tickers to see this metric applied to individual companies.
Educational research only — not investment advice.