Your question is Bridge Equity Value to Enterprise Value. Take a moment with it on the right.
Talk me through your thinking if you like. When you're confident, submit your answer and I'll grade it like a real screen (7/10 or better passes).
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.
| Metric | Value |
|---|---|
| Diluted shares outstanding | 250.0 |
| Share price | $48.00 |
| Total debt | $4,200 |
| Cash and cash equivalents | $1,350 |
| Preferred stock | $300 |
| Minority interest | $150 |
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?