Enterprise Value
Definition
The total economic value of a company, representing the value of its operations attributable to all capital providers, including equity holders and debt holders. Enterprise value is calculated before the subtraction of cash and before the addition of debt. Enterprise value is not equivalent to equity value. To derive equity value from enterprise value, net debt is subtracted: equity value equals enterprise value minus total debt plus cash.
Common Misapplication
The most common misapplication is using enterprise value and equity value interchangeably. For companies with significant cash balances or debt, the difference is material. A company with an enterprise value of ten million pounds and five million pounds of cash on the balance sheet has an equity value of fifteen million pounds, not ten million.
FFI Standard Reference
This term is defined and applied in Book 4, Section 4.1: The Valuation Methodology Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Enterprise Value. https://ffistandard.org/glossary/enterprise-value/. 2026.