The Enterprise Value To Equity Value Calculator helps determine a company's equity value from its enterprise value by adjusting for debt, cash, minority interest, and preferred equity. This is essential in corporate finance, M&A valuation, and investment analysis, where stakeholders aim to isolate the portion of the business owned by common shareholders. The calculator belongs to the Corporate Valuation and Financial Metrics Calculator category.
By calculating equity value, users can better assess market capitalization, determine share pricing fairness, or evaluate return on investment.
Formula of Enterprise Value To Equity Value Calculator
Equity Value = Enterprise Value − Net Debt − Preferred Equity − Minority Interest + Cash and Cash Equivalents
Detailed Variable Calculations:
1. Enterprise Value (EV)
EV = Market Capitalization + Total Debt + Preferred Equity + Minority Interest − Cash and Cash Equivalents
- Market Capitalization = Share Price × Total Outstanding Shares
- Total Debt = Short-Term Debt + Long-Term Debt
- Preferred Equity = Value of preferred shares listed in equity section
- Minority Interest = Value of subsidiaries not owned by the parent
- Cash and Cash Equivalents = Balance sheet cash and highly liquid assets
2. Net Debt
Net Debt = Total Debt − Cash and Cash Equivalents
Only interest-bearing liabilities are included. Cash equivalents may include:
- Bank deposits
- Treasury bills
- Short-term investments
3. Preferred Equity
Found in the balance sheet under the equity section. Represents shares that pay fixed dividends and have preference over common stock during liquidation.
4. Minority Interest
Represents the portion of a subsidiary’s equity not owned by the parent company. It’s added to EV and subtracted when calculating equity value.
5. Cash and Cash Equivalents
Includes:
- Physical cash
- Checking accounts
- Marketable securities
This offsets total debt and reduces enterprise value to derive true equity.
Quick Reference Table
Below is a table of commonly used valuation components and what they represent:
| Term | Description |
|---|---|
| Enterprise Value (EV) | Total value of business operations |
| Equity Value | Value attributable to shareholders |
| Net Debt | Total debt minus cash |
| Preferred Equity | Value of preferred shares |
| Minority Interest | Equity not owned in subsidiaries |
| Cash & Equivalents | Liquid assets available to offset debt |
This table serves as a quick lookup to understand which financial components influence the equity value.
Example of Enterprise Value To Equity Value Calculator
Let’s assume the following values for a company:
- Enterprise Value = $500 million
- Total Debt = $150 million
- Cash and Equivalents = $50 million
- Preferred Equity = $20 million
- Minority Interest = $30 million
Step 1:
Calculate Net Debt
Net Debt = $150M − $50M = $100M
Step 2:
Apply the main formula:
Equity Value = $500M − $100M − $20M − $30M + $50M
Equity Value = $500M − $150M + $50M = $400 million
So, the calculated equity value of the company is $400 million, representing the portion that belongs to common shareholders.
Most Common FAQs
Equity value shows how much the shareholders’ portion of the company is worth. It's used in stock valuation, financial analysis, and investment decision-making.
Enterprise value includes the full value of the business (debt, equity, and minority interest), while equity value represents only the ownership stake of common shareholders.
Yes. Cash reduces the net obligation (net debt), which increases the value available to shareholders. That’s why it’s added after adjusting for debt and other claims.