Series 79 practice questionmediumEnterprise Value vs Equity Value
A company’s market capitalization is $800 million, it has $200 million in debt, and $100 million in cash. What is its enterprise value?
- A$800 million
- B$1 billion
- C$900 million✓ Correct answer
- D$1.1 billion
Explanation
Why C — $900 million
Enterprise value is calculated as market cap plus debt minus cash ($800M + $200M - $100M = $900M). Incorrectly adding or failing to subtract cash can misstate the company’s value.
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