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Bridge Equity Value to Enterprise Value

MediumFinance & Accounting00:00
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Problem

Scenario

You are preparing valuation materials for a mid-sized public payments company ahead of a board review. The CFO wants a clean explanation of why the operating business should be discussed using enterprise value rather than just market capitalization. You have the current share count, share price, debt, cash, preferred stock, and minority interest from the latest quarter-end. Assume all figures are as of the same date and in USD millions except per-share data.

Financials

MetricValue
Diluted shares outstanding250.0
Share price$48.00
Total debt$4,200
Cash and cash equivalents$1,350
Preferred stock$300
Minority interest$150

Question

What are the company's equity value and enterprise value, and how would you explain the difference between the two in a valuation discussion? If the share price moved up or down by 10%, how would that change enterprise value?

Key Inputs

Cash·$1.35BDebt·$4.2BPreferred·$0.3BShare price·$48.00Diluted shares·250.0MMinority interest·$0.15B

What This Tests

  • Market capitalization / equity value math
  • Enterprise value bridge
  • Valuation metric selection for operating analysis