IB Interview Questions: Enterprise Value vs Equity Value

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1. What is the Enterprise Value Formula?

Enterprise Value = Equity Value (or ‘Market Capitalization’) + Debt – Cash + Minority Interests

2. What is the Equity Value Formula?

Equity Value = Enterprise Value – Debt + Cash – Minority Interests

3. A business has an EV of $100, Debt of $40, and Cash of $10. What is the company’s Equity Value?

Enterprise Value of $100 – $40 of Debt + $10 of Cash = $70 Equity Value

4. I read somewhere that cash is a “non-operating asset”. What does that mean?

Cash is an output of a business and not a part of the business. In contrast, Assets like Account Receiveable and Inventory are employed directly in the business and thus are ‘Operating Assets.’



IB Interview Questions: Valuation : Weighted Average Cost of Capital

Level 2 Valuation Questions : DCF and WACC Concepts


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