Understanding enterprise value

Valuation metrics are used to determine the true worth of a company. Shedding light on the context of a company's share price, they help in assessing the company's investment potential. In the previous two parts of our Valuations 101 series, we have discussed two relative valuation metrics, P/E and P/B. Unlike those two, the enterprise value approach is an absolute valuation metric and is based on the premise that both equity and debt capital of a company should be taken into account for valuing a company appropriately. The enterprise valu

This article was originally published on November 26, 2020.