Enterprise value

In cash-flow valuation, enterprise value commonly means the present value of operating free cash flows to the firm discounted at an appropriate WACC. To derive ordinary equity value, adjust consistently for debt, separately valued surplus cash and other non-operating assets or claims. Market conventions differ over items such as leases, minority interests and pension obligations, so define the calculation and use matching earnings or cash-flow measures. Do not mechanically add every cash balance if it is required for operations and already reflected in the model.