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Finance 9 Online
OpenStudy (anonymous):

hi can someone please tell me why we add debt back on to EV is not already represented in the market cap of a company.

OpenStudy (anonymous):

Enterprise value represents the market capitalization and debt of the company (Equity and debt), so the value of the company that is hold by investors and debt. In order to know the market capitalization you have to do EV - Debt, because market cap represents the value of the company that belongs to the equity investors. its like, you own the company, and the value of the entire company is the Enterprise Value, but because you have debt you have to payback that debt, so you do EV-Debt = Market Cap.

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