Equity Value is another term for Market Capitalization. It comes in two forms:
- Basic Equity Value - Share Price x Basic Shares Outstanding
- Diluted Equity Value - Share Price x Diluted Shares Outstanding
The only difference is the number used for Shares Outstanding. Diluted Shares Outstanding is Shares Outstanding including any dilution from options, convertible bonds etc.
Although Equity Value is one of the most commonly quoted numbers when talking about the value of a company, it is actually not that useful as Enterprise Value reflects a far truer value. Equity Value is used in conjunction with Free Cash Flow as a valuation ratio though.
- Convertible Bond
- Enterprise Value (EV)
- Free Cash Flow (FCF)
- Market Capitalization
- Shares Outstanding