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Glossary · PSX term

Enterprise value.

Enterprise value estimates the value of the whole business by combining market capitalization with net debt. It helps investors compare companies with different capital structures.

Definition

A common formula is market capitalization plus total debt, minus cash and equivalents. Enterprise value is useful when debt levels matter, because market cap only reflects the equity value.

Worked example

If a company has a market cap of Rs. 80 billion, debt of Rs. 20 billion, and cash of Rs. 5 billion, enterprise value is roughly Rs. 95 billion.

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