In this guide, we outline the difference between the enterprise value of a business and the equity value of a business. Simply put, the enterprise value is the entire value of the business, without giving consideration to its capital structure. Learn all about Enterprise Value vs Equity Value.

Enterprise value

The enterprise value (which can also be called firm value or asset value) is the total value of the assets of the business (excluding cash). When you value a business using unlevered free cash flow in a DCF model you are calculating the firm’s enterprise value. If you already know the firm’s equity value, as well their total debt and cash balances, you can use them to calculate enterprise value.

Enterprise value formula

If equity, debt, and cash are known then you can calculate enterprise value as follows:

EV = (share price x # of shares) + total debt – cash

Where EV equals Enterprise Value. Note: If a business has minority interest, that must be added to the EV as well. or

Calculate the Net Present Value of all Free Cash Flow to the Firm (FCFF) in a DCF Model to arrive at Enterprise Value.

Equity value

The equity value (or net asset value) is the value that remains for the shareholders after any debts have been paid off.  When you value a company using levered free cash flow in a DCF model you are determining the company’s equity value. If you know the enterprise value and have the total amount of debt and cash at the firm you can calculate the equity value as shown below.

Equity value formula

If enterprise value, debt, and cash are all known then you can calculate equity value as follows:

Equity value = Enterprise Value – total debt + cash


Equity value = # of shares x share price

Use in valuation

Enterprise value is more commonly used in valuation techniques as it makes companies more comparable by removing their capital structure from the equation. In investment banking, for example, it’s much more common to value the entire business (enterprise value) when advising a client on an M&A process.

In equity research, by contrast, it’s more common to focus on the equity value, since research analysts are advising investors on buying individual shares, not the entire business.