Enterprise value, Market capitalization, Equity value, EBITDA - difference
What is the difference between Enterprise value, Market capitalization, Equity value and EBITDA ? Which one is more accurate and reflects the real value of the company ?
Enterprise value can be calculated base on Market capitalization and some other indicators.
Value of the company can be also calculated base on EBITDA, but this method is considered to be quick and not so accurate.
Enterprise Value = Market Capitalization + Debt + Minority Shares + Preferred Stock - Total Cash - Cash Equivalents
Market Capitalization = Number of Outstanding shares * Current market value of one share
EBITDA = Earnings before Interest, Tax, Depreciation and Amortization. Business worth is usually calculated as 3 to 7 times of its EBITDA.
Enterprise value is calculated base on company shares and their value.
EBITDA is calculated base on company earnings.
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