Defining Enterprise Value (EV) and Market Capitalization (MCAP)
Enterprise Value (EV): Represents a company’s total value, incorporating market capitalization, debt, minority interest, and cash reserves. It offers a comprehensive view of the company’s worth, particularly from an acquisition perspective. Formula: EV = Market Cap + Total Debt + Minority Interest – Cash & Cash EquivalentsMarket Capitalization (MCAP): The market value of a company’s outstanding shares, calculated by multiplying the share price by the total number of shares in circulation. Formula: MCAP = Share Price × Total Shares Outstanding
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