Enterprise Value (EV)
Total value of a company including debt and excluding cash.
Definition
Enterprise value represents the theoretical takeover price of a company. It equals market capitalization plus total debt minus cash and equivalents. EV is less commonly used for banks due to the unique nature of bank balance sheets where deposits are both a source of funding and a liability.
Formula
EV = Market Cap + Total Debt - Cash & Equivalents
Why It Matters
For non-bank financials like insurance companies or asset managers, EV-based multiples can provide a more complete valuation picture than P/E alone since they account for capital structure differences.