Enterprise value is computed as
A)Price per share × Shares outstanding - Cash
B)Market capitalization + Market value of interest-bearing debt - Cash
C)Market capitalization - Market value of interest-bearing debt
D)Price per share × Number of shares outstanding
E)Market capitalization + Market value of all debt - Cash

Question

Quizplus · Accepted Answer

Enterprise value is the total value of a company's operations, including both equity and debt. It is calculated by adding the market value of interest-bearing debt (including both short-term and long-term debt) to the market capitalization (number of shares outstanding multiplied by the price per share) and subtracting any cash or cash equivalents. This gives a more accurate picture of a company's total value, as it takes into account the impact of debt on the company's operations. Choice B is the formula for calculating enterprise value.

Enterprise Value Is Computed as