Negative Enterprise Value Question
Quick question on a hypothetical question regarding negative EV. How could enterprise value be negative besides the company having more cash than market cap and very little debt and no preferred? Is there any other way?
MattAH, way too quiet in here. What about these resources:
Hope that helps.
If you count NOLs as non-operating assets and you have a high NOL balance and a low market cap with no/little debt, then yes.
Think about it. Let's say the company has negative cash flows in perpetuity, sure the EV is negative despite. It starts from the EV side of equation instead of the equity value side. Another way to put it, a hypothetical firm will have levered cash flows 0 in every year until the world get destroyed. Do you think they will have MV of equity >0? No.
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