What is enterprise value? - MoneyWeek Investment Tutorials

[@sunchaserw1477]

if he had been my teacher in school, I would have been a professor by now. Never had I met a person who could explain something in such a great fashion. Thank you Sir!

[@zenzeleluckymtshali8433]

and improving as in assets in private listing in that value to 950 million falklands oil position resttrcturing laboutr hr staff why..resoltion inn type oil minned

[@2tce]

Tim Bennett is just too good! Clear, precise and sans jargon.

[@TheCarDetailer]

Thanks! I am doing an internship in M&A and had a bit of trouble grasping this concept. You explained it very well!

[@bhargavgautam6408]

I was not able to understand why we subtract cash while calculating Enterprise Value .... but finally, with your Christmas present example i got it Thanks man

[@swissmammoth]

Such an excellent communicator.

[@avinashraparthi8551]

I finally understood why cash is deducted while calculating enterprise value. Thanks a lot sir

[@apurwasharma3838]

Your videos are really informative. I hope you post more videos.

[@thesidehustlecrew6533]

Superb video! Thanks for explaining the concept in such a simple way.

[@stonathanjokes2142]

Will be following you around the internet

[@charisborquaye68]

Tim Bennett is the best 🙌🏼

[@ThangLe-yf6wj]

Thank you! That was amazingly helpful with the mortgage analogy.

[@fightmike8808]

men you the best. Economy is life and is everything we breath, i dont understand why people make it to be so complexe and complicated. This guys explanation can create great economists and accountants li

[@abhinavitsmebellamy]

Terrific video. Thanks a ton, Tim!!

[@Gweorge]

GREAT explanation BUT I think you made a large error at the end ( 6:10 ) “EV can be applied to answer what would someone pay to buy all of the company at it’s market value.” The price if you bought the whole company is the Market Cap, NOT the Enterprise Value. In your example, if Tesco magically added another 9,000 in debt, and nothing else changed, the company would not be more valuable, it would be less valuable (assuming same assets, profits etc.) The market cap would decrease by ~9,000, and the EV would not change because it would add it back in. You have to be able to buy the company for less because you’re also buying its debt. Am I wrong? If so how? Please let me know. Thank you so much.

[@QueenVProduction]

This is video helped me out alot. Thanks!

[@ashleydingle7784]

Thank you, very clear and concise!

[@pratik_work256]

Thank you Teacher.

[@gszabo7464]

clear explanation with good examples. Thank you!

[@Alkhaber_HadyNagy]

Thank you. I have got here to know that why we subtract the cash item, and I got it!

[@amirmousavi1491]

I was wondering how EV could help us to find whether or not the current stock price is worth buying?

[@spaceteamfin4916]

Not the funding is valued, what is valued is the residual interest in the assets. The valuation derives from the cash-flows generated by the assets. The external market value for all the EV elements is the result of guessing the residual interest in the Total assets.

[@eliasbenos3867]

Very well explained.

[@delafo3743]

Is the tax shield part of the enterprise value?

[@chandrakiranraju]

Thanks man!

[@nikhilramabadran5691]

A small clarification What if the company already has assets, on which it has redeemed the mortgage, but also has taken a mortgage on a new asset, which it has acquired and on which it's paying off debt. Won't the enterprise value, in such a case, also include the market value of the assets

[@franco521]

I get that "net debt" is sort of what the banks paid for the assets, but I don't get why "market cap" is what the shareholders paid. Take Amazon for example. Most shares were issued at IPO price which was much less than current price.

[@raphaelyounes4308]

cost of opportunity of the shareholders cash

[@shengzheng1905]

Sir, is the money from the shareholders counted into cash saving used to calculate the net debt?

[@Dave_UL]

So let me get this straight... if net cash is higher than net debts, one would assume the additional cash is baked into the market cap... that's why you subtract it because in theory you are just getting it back ? Think I finally understand

[@cosmicad1985]

if the debt or the equity contribution has been used to fund operations and not asset purchases ...then is there a change in enterprise value....

[@SuperAezz]

So what should I use instead of market cap if I am valuating a firm that do not have stocks.

[@timmypompom4810]

Awesome. What if the company has more cash than debt? That would make the formula look like this: market cap plus the negative cash amount; does that mean the EV naturally excludes the company's cash on hand?

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[@vijendranvijay2236]

I was hoping for an in-depth explanation of the concept with complicated issues . Hope you make the same

[@muralimohan71]

Sir, I had a doubt. If anybody want to buy a whole company, he needs to pay amount equals to Enterprise value(Market capitalization+Debt of a company-Cash reserves). Market cap is calculated with outstanding shares and current market price. Here we are not considering promoter holdings, then how can we buy the entire company with based on market cap value. For example, consider a company X is having 90% promoter holding and 10% outstanding shares with zero debt and huge cash reserves. Then if anybody wants to buy this company, does it possible to buy at enterprise value where outstanding shares are very less compared to promoter holding, no debt and huge cash reserves. I am confused with this concept. Could you please clarify my doubt and help me on this. I will be thankful to you a lot.

[@Sprinklesofjoy]

sanapala murali Don’t forget about pension deficits and minority interests

[@zenastronomy]

why is debt added and not minused in the EV equation? i would have thought the companies value would be market cap minus debt. not plus debt?

[@tag_of_frank]

How does convertible preferred equity factor in

[@tusnguyen4139]

How do i thank u?

[@davidalen9279]

Superb. Thank you.

[@anwarabd2016]

where is the liquid asset?

[@purudate4049]

Greetings ! The presenter started with the narrative that total assets and how they are funded is more relevant. Thus, assets are taken at its book value. Why then equity is taken at market value? Market value is a mix of intrinsic value and speculation

[@phantomcreamer]

Why not ev to free cash flow?

[@kevin5vish]

Can EV be negative? And that means cash more than debt?

[@Gweorge]

Theoretically EV could be negative. You would not only need more cash then debt, you would need more cash than the market value of the company

[@Gweorge]

This could happen if the company is losing money, if it goes bankrupt it just burns through the cash and investors never get a return. But even rivian is burning cash and has a positive ev

[@kenroylarmond7736]

Wait, so net debt adds to enterprise value?

[@Aaron-xn7dg]

You add net debt to the market capitalization to get to the enterprise value

[@oneth789]

i wonder also. i think should be deducted. unless i this example the cash is more than debt

[@dutchbeastz]

@@oneth789 I got the same struggle. He added the debt to the total EV value 🤔. So the more debt you take the higher your company is valued? You do, on the other hand, got the money but only in the form of a debt. But that would also equal zero.

[@durrer9038]

"What would someone pay to buy Tesco?" -> Isn't this the market cap? If you manage to buy all the shares on the market, you pay the value of market capitalisation, not EV??

[@GK-mx9je]

Very good

[@backspace4353]

So the more debt I can get the higher my value will be. I see why so many people go broke.

[@aaaronias]

Never understand this metric, for example if I have a bussines that sell 100$ bills for 90$ each, to sustain it and cover the losses I borrow a million dollars from the bank each week, so in the end of the year its enterprise value will be 52 million dollars??? 🤣

[@aakashwamane9971]

really helpfull

[@visitwithus]

Wow! You only spend £100 in total on Christmas presents? PLEASE do a video showing us how! :P

[@groeisterk]

awesome thx

[@zenzeleluckymtshali8433]

150 million in capex claims

[@MrJuanPabloAlvis]

It is an easy way to understand that I cant understand in my finance book.

[@raajupadhyay7600]

namsate sir

[@egor.okhterov]

Pretty useless metric. I would rather have a list of items owned by a company. If someone wants to buy a company altogether, the price of the shares will increase immediately.