Enterprise Value of Company

[Placebo]

Hi riser3. Good to know that there are many more people on this forum who believe in looking at FCF's. Due to time constraints i am unable to complete the procedure of calculating EV. Anyways , you said something about facing difficulty in estimating FCF's. Maybe you could be a little more specific and tell me where the problem is arising and then i shall try my best to answer your questions.

Cheers

 

[ven656]

EV of a company is = equity(market capitalization) +debt-(cash+investments)

 

[gaurav5052]

EV is nothing but the value of a company. it is a price at which someone would like to purchase the company. So suppose HCL Technologies has a EV of US5bn then you have to pay approximate US$5bn to purchase that company.

Now if you are purchasing the company then you are purchasing everything of that company including the cash, assets and also the debt. So in that case, the formula of EV would be:
EV = Market Cap (closing share price * no of shares outstanding (you can use diluted shares also) + total debt + preferred stock+ non controlling interest - cash and cash equivalent