What is Enterprise Value
- Future value of a business
- How much buyer is willing to pay for the business
Equity Value
Equity Value = Enterprise Value – Net Debt
Gross Debt vs Net Debt
Absence of Cash to pay off Gross Debt results –> lower Equity Value
Equity Value = Enterprise Value – Net Debt (Gross Debt – Cash)
Gross Debt or Net Debt? When to use Which?
What happens when Enterprise Value Decreases
What happens when Net Debt Increases
