Definition

Enterprise value is the overall value of a company. It factors a company's market cap, total debt, and available cash.

Calculations

Enterprise Value = Market Cap + Total Debt - Cash

Why is this important?

Enterprise value is a more accurate value of a company because if it were to be taken over it would require the debts to be paid off and would factor that debt into the overall value of the company. This metric is popular when it comes to identifying candidates for possible takeovers.