Enterprise Value- Why You Add and Subtract Items

In this Enterprise Value lesson we take a look at the rules of thumb to figure out what should be added or subtracted when you calculate it.
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
This also covers a short case study based on Vivendi (a leading media/telecom conglomerate based in France),

Everyone knows the definition of Enterprise Value: Take Equity Value, add Debt and Preferred Stock (and others), and subtract Cash...

But WHY do you do any of that?

Enterprise Value represents the value of the company's CORE BUSINESS OPERATIONS to ALL THE INVESTORS in the company - equity, debt, preferred stock, etc.

So focus on OPERATIONAL ITEMS and ALL INVESTORS when thinking about what to include... and what to exclude!


http://www.mergersandinquisitions.com/