[Verse 1]
When you're valuing a company, there's two ways to see
The worth that lies within its operations and equity
Enterprise value looks at all the capital combined
While equity value shows what shareholders can find
[Chorus]
E V equals market cap plus debt minus the cash
That's the total business value, calculated fast
Equity value is what owners truly hold
Market cap times shares outstanding, story told
Two different lenses, two different views
Pick the right one when you analyze and choose
[Verse 2]
Enterprise value treats the firm as debt-free entity
It's what you'd pay to buy the whole company
Add up market cap, then debt you must include
Subtract the cash and equivalents, that's the prelude
[Chorus]
E V equals market cap plus debt minus the cash
That's the total business value, calculated fast
Equity value is what owners truly hold
Market cap times shares outstanding, story told
Two different lenses, two different views
Pick the right one when you analyze and choose
[Bridge]
For comparing companies with different debt levels
Enterprise value keeps you steady, never disheveled
When capital structure varies across the field
E V to E B I T D A gives you comparable yield
But if you're buying shares, not the whole company
Equity value is your key to profitability
[Verse 3]
Use enterprise when you're doing multiples comparison
Different leverage shouldn't cloud your analysis foundation
Use equity value for per share calculations true
Earnings per share and book value coming through
[Chorus]
E V equals market cap plus debt minus the cash
That's the total business value, calculated fast
Equity value is what owners truly hold
Market cap times shares outstanding, story told
Two different lenses, two different views
Pick the right one when you analyze and choose
[Outro]
Enterprise or equity, now you know the way
Choose your valuation method for the task today
Both have their place in the analyst's toolbox
Understanding both will help your knowledge unlock