Enterprise value and equity value
Most likely, my question is stupid and trivial, yet has caused confusion.
As far as I know, Enterprise value = equity value + Debt + Preferred stock + minority interest - Cash and cash equivalents
Net debt = Debt - Cash and cash equivalents
To rewrite the formula for the enterprise value: Enterprise value = Equity Value + Net debt + Preferred stock + Minority Interest
I can't understand why some sources state that Enterprise value equals equity value plus net debt. I guess it's only true assuming that preferred stock and minority interest is zero (as well as some other items that are not accounted in this simplified formula).
Rosenbaum and Pearl also subtract net debt from enterprise value to get equity value (to be fair there's a footnote saying that net debt often is often considered to include any obligations senior to common equity). That phrase doesn't clarify it very much.
Can you please explain the issue?
