What Is Equity Value?

Osman Ahmed

Reviewed by

Osman Ahmed WSO Editorial Board

Expertise: Investment Banking | Private Equity

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.

Related Terms

Return to Finance Dictionary

Osman Ahmed

Osman Ahmed is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. Osman started his career as an investment banking analyst at Thomas Weisel Partners where he spent just over two years before moving into a growth equity investing role at Scale Venture Partners, focused on technology. He’s currently a VP at KCK Group, the private equity arm of a middle eastern family office. Osman has a generalist industry focus on lower middle market growth equity and buyout transactions. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.