The EV to equity bridge is summarized as enterprise value = equity value + debt – cash and cash equivalents.

It is driven by a combination of factors including company performance, industry dynamics and economic climates.Enterprise value is the value of the operational business and is unaffected by capital structure changes (except at high leverage levels where the level of debt confers extra risk as the default probability rises).This is because companies looking to value and acquire a target can change the capital structure (how the company is financed) with ownership. A company looking to acquire a target company is likely to be more interested in the sales, cost structure and products it sells. The distinction between enterprise value and equity value is important for analysts who want to ignore the impacts of capital structure. When considering what drives its value, this includes company performance, industry dynamics and general economic factors. Equity value (or market capitalization) is the value attributable to the owners or shareholders (frequently expressed on a per-share basis for public companies).įor valuation purposes, enterprise value focuses on the operations of the company and is unaffected by financing decisions (unlike equity value). Enterprise value is the value of the operational business, independent of capital structure. Enterprise value is one of the most common types of company valuation used in corporate finance, along with equity value.

$nvda enterprise value