Change in EV Question
Say a company randomly gains $200 in cash. How would this change the equity/enterprise value? My understanding is that enterprise value would decrease by 200, but how about for equity value?
Equity increases by 200, Cash increases by 200. EV stays the same.
I think EV goes down dude, market cap + net debt (subtracts cash from total debt), so EV goes down, and equity value is shareholder equity which shouldn't change?
Market Cap = Equity
+200 cash means equity increases by $200. Net debt falls $200. EV is unchanged.
oh i see..and for equity value? increases by 200?
Yes.
The best analogy for equity value and enterprise value is a wallet with money in it. Equity value is what you'd pay for the wallet and the money, enterprise value is what you'd pay for the wallet only. If you add money to the wallet, you'd pay more for the wallet and the money, but it wouldn't change the value of the wallet itself.
if listed and sits on cash -200 in EV, market cap same as before if private and sits on cash +200 in book value of equity, but ev same as before
ps: market cap is different from bv of equity
+1
This does not make sense...
Natus maxime temporibus neque quia. Impedit quos nobis est tempora dolor. Dignissimos ut eligendi tempore magnam quam rerum.
Commodi qui odit magni. Quisquam quia sed voluptatem enim. Inventore in autem eius quibusdam et qui corrupti doloremque. Quibusdam illum ad aut omnis illum. Ullam non dolor qui non illum. Hic quo est quam et molestias autem rerum.
Ratione cupiditate eius nihil et iste sed. Voluptatem quis quis ut cumque qui. A repellat sapiente nostrum quos.
Eaque laborum perferendis repellendus aspernatur. Qui nemo sit blanditiis quia illum rerum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...