Question

Is the EV Enterprise value credible?

Enterprise value = market capitalization + market value of debt – cash and equivalent

Answer 1

Enterprise value is considered as an important tool in valuation because it is calculated after taking into consideration of the cash flows as well as market capitalisation along with market value of debt so it is often seen as an adequate measure to value the overall company valuation.

According to me, those companies who are not able to generate an adequate amount of profits and they are having a problem in maintaining an uniform amount of cash flows, those companies will be better valued by enterprize value method and I think enterprise value method is one of the the modern and sophisticated method, which can be helpful in finding out the valuation of the companies which are not conventional in nature.

Enterprise value to is one of the the prime methods of valuation in the modern world to arrive at whether to invest or not to invest in a company.