Why subtract cash from enterprise value?

Cash reduces the net cost of acquisition. If you buy a company for its market cap and assume its debts, the cash on hand effectively reduces what you paid. That is why cash sits on the opposite side of the formula.

What is a good EV/EBITDA ratio?

It varies by sector. Below 10× is generally considered cheap, 10-15× is moderate, and above 20× is expensive. Tech companies often trade at higher multiples. The industry context matters more than one universal cutoff.

How is EV different from market cap?

Market cap only values equity. EV values the entire business including debt. Two companies with the same market cap but different debt levels have very different EVs. EV is the broader acquisition lens.

When should I use EV/Revenue vs EV/EBITDA?

Use EV/Revenue for pre-profit companies or when comparing across industries with different margin structures. EV/EBITDA is preferred when comparing established, profitable companies. The right multiple depends on the business stage.

What is minority interest?

It represents the portion of subsidiaries not owned by the parent company. It is included in EV because the parent company's consolidated financials include the full subsidiary performance.

Can enterprise value be negative?

Yes, if cash exceeds market cap plus debt. This is rare and usually signals a company trading below its liquidation value. It is more of a balance-sheet edge case than a normal market condition.

Enterprise Value Calculator

Calculate enterprise value (EV) from market cap, debt, and cash. Compute EV/EBITDA, EV/Revenue multiples and compare against sector benchmarks.

Market Capitalization ($)

Total Debt ($)

Cash & Equivalents ($)

Preferred Stock ($)

Minority Interest ($)

EBITDA ($)For EV/EBITDA multiple

Annual Revenue ($)For EV/Revenue multiple

Shares Outstanding

Enterprise Value

$52,000,000,000.00

MC + Debt − Cash + Preferred + Minority Interest

Net Debt

$2,000,000,000.00

Total Debt minus Cash & Equivalents

EV/EBITDA

4.3×

Enterprise value relative to EBITDA

EV/Revenue

1.04×

Enterprise value relative to annual revenue

Price Per Share

$50.00

Market cap ÷ shares outstanding

EV Per Share

$52.00

Enterprise value ÷ shares outstanding

Enterprise Value Composition

Market Cap

$50,000,000,000.00

Total Debt

$10,000,000,000.00

Less: Cash

-$8,000,000,000.00

EV/EBITDA Sector Benchmarks

Sector	Typical Range	Your EV/EBITDA	Status
Technology	15-25×	4.3×	Cheap
Healthcare	12-20×	4.3×	Cheap
Consumer Staples	12-16×	4.3×	Cheap
Industrials	10-14×	4.3×	Cheap
Energy	6-10×	4.3×	Cheap
Utilities	8-12×	4.3×	Cheap
Financials	8-12×	4.3×	Cheap

Planning notes, formulas, and examples

About the Enterprise Value Calculator

Enterprise value estimates the cost of buying the entire business, not just the equity slice shown by market capitalization.

The calculation adds debt, subtracts cash, and optionally includes preferred stock or minority interest so the result reflects the full capital structure. The calculator also derives EV/EBITDA and EV/Revenue multiples, which are the more common comparison tools once you want to benchmark one company against another.

That makes it useful whenever leverage or cash materially changes the way a company should be valued.

When This Page Helps

Market cap alone can make two companies look more similar than they really are. Enterprise value corrects for debt and cash, which is why it is the standard starting point for M&A comparisons and EV-based valuation multiples.

How to Use the Inputs

Enter the company's market capitalization (share price × shares outstanding).
Enter total debt (short-term + long-term borrowings from the balance sheet).
Enter cash and cash equivalents.
Add preferred stock and minority interest if applicable.
Enter EBITDA and revenue for valuation multiples.
Review enterprise value, multiples, and sector comparison.

Formula used

EV = Market Cap + Total Debt − Cash + Preferred Stock + Minority Interest
Net Debt = Total Debt − Cash
EV/EBITDA = Enterprise Value / EBITDA
EV/Revenue = Enterprise Value / Revenue

Example Calculation

Result: EV = $52 billion, EV/EBITDA = 4.3×

Market cap of $50B plus $10B debt minus $8B cash equals an enterprise value of $52B. With EBITDA of $12B, the EV/EBITDA multiple is 4.3×, suggesting a relatively cheap valuation.

Tips & Best Practices

Always use EV multiples (not P/E) when comparing companies with different leverage levels.
A declining EV/EBITDA amid rising EBITDA often signals an undervalued stock.
Check net debt separately — a high EV can be driven by excessive debt rather than equity value.
For acquisitions, the acquirer pays EV (takes on debt, gets cash), not just market cap.
Compare EV/EBITDA over time for the same company to identify valuation trends.

Why Debt And Cash Matter

Enterprise value works because debt is part of what an acquirer inherits while cash reduces the net price paid. That makes EV more useful than market cap when leverage is meaningful.

Reading The Multiples

EV/EBITDA and EV/Revenue are comparison tools, not standalone verdicts. A company can look cheap on one and expensive on the other depending on margins, growth, and capital intensity. The right multiple depends on the business and the peer group.

Acquisition Lens

If you were buying the whole company, EV is closer to the amount you would actually need to account for. That is why it is the preferred lens in M&A and in comparisons between companies with different debt loads.

Sources & Methodology

Last updated: March 29, 2026

Methodology

This worksheet computes enterprise value from the entered market capitalization, debt, cash, preferred stock, and minority interest using the standard bridge `EV = equity value + debt - cash + preferred stock + minority interest`. It also derives EV/EBITDA, EV/revenue, net debt, and per-share views from those same balance-sheet and market-value inputs.

The formula outputs are mechanical, but the sector comparison table is only a rough market-reference aid. It is not an official valuation rule, and it does not account for growth, cyclicality, lease adjustments, or other company-specific factors that can change how EV multiples are interpreted.

Sources

Glossary: Market Capitalization (Investor.gov / U.S. Securities and Exchange Commission) — SEC investor glossary definition for the equity-value component used in enterprise-value calculations.
Beginners' Guide to Financial Statements (U.S. Securities and Exchange Commission) — SEC guide covering balance-sheet items such as cash, liabilities, and minority interests that feed into EV.

Frequently Asked Questions

Cash reduces the net cost of acquisition. If you buy a company for its market cap and assume its debts, the cash on hand effectively reduces what you paid. That is why cash sits on the opposite side of the formula.