Enterprise Value
Enterprise value is the market value of operating assets — equity plus net debt and other non-equity claims, minus non-operating cash.
Definition
EV ≈ equity market cap + interest-bearing debt + preferred + NCI − cash (and often − associates). It is the invoice a buyer of the whole firm would write before control premia. Multiples like EV/EBITDA live here so leverage does not distort P/E.
Why it matters
Two firms with the same equity value and different net cash are not the same asset. EV is how you compare them.
Case
A net-cash tech name at 25× earnings can be 18× EV/EBIT. A levered peer at 18× earnings can be 28× EV/EBIT. The cheap P/E was leverage.
How to read it
Define cash that is actually excess, and leases or pensions you treat as debt. Then keep the denominator consistent (EBIT vs EBITDA vs FCF).