The enterprise value estimates the
A)current market value of a firm's entire outstanding shares of common and preferred stock.
B)cash required to purchase all of a firm's outstanding stock and pay off the interest-bearing debt.
C)current market value of all a firm's outstanding debt.
D)relationship between the current market value and the book value of a firm.
E)total current market value of a firm's outstanding shares of common stock.

Question

Quizplus · Accepted Answer

Enterprise value is a measure of a company's total value, representing what it would cost to acquire the entire business. It includes the total market value of the company's outstanding equity plus the amount of debt that would need to be paid off in the event of an acquisition. Therefore, option B - cash required to purchase all of a firm's outstanding stock and pay off the interest-bearing debt is the correct option.

The Enterprise Value Estimates the