Home » Simplify your calculations with ease. » Financial Calculators » Enterprise Value To Equity Value Calculator

Enterprise Value To Equity Value Calculator

Show Your Love:

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

See also  Collateral Coverage Ratio Calculator

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.

See also  Azero Staking Calculator Online

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:

TermDescription
Enterprise Value (EV)Total value of business operations
Equity ValueValue attributable to shareholders
Net DebtTotal debt minus cash
Preferred EquityValue of preferred shares
Minority InterestEquity not owned in subsidiaries
Cash & EquivalentsLiquid 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
See also  Offset Multiplier Calculator Online

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

Why is equity value important?

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.

What’s the difference between enterprise value and equity value?

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.

Do I need to add cash back in the formula?

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.

Leave a Comment