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

The enterprise value estimates the cash required to purchase all of a firm's outstanding stock and pay off the interest-bearing debt. It is calculated by adding market capitalization, outstanding debt, and preferred stock, and then subtracting cash and cash equivalents. This provides a more accurate measure of a company's worth as it takes into account both equity and debt.

The Enterprise Value Estimates the