MetricKitMetricKitBrowse calculators

Enterprise value vs equity value: how to bridge EV to equity

A practical guide to converting enterprise value (EV) into equity value using net debt and other claims (and avoiding common valuation mix-ups).

Updated 2026-01-28

Try it in a calculator

Equity Value Calculator
Example: $50M EV, $8M cash, $12M debt

Why this bridge matters

Valuation outputs are often quoted as enterprise value (EV), especially from DCF models that discount unlevered free cash flows. Investors care about equity value (what's left for shareholders), which requires adjusting EV for net debt and other claims.

Core bridge

Equity value = EV + cash - debt - preferred stock - minority interest + other adjustments.

Common pitfalls

  • Using EV/Revenue multiples but comparing to equity value market cap (mismatch).
  • Using stale balance sheet numbers with a current EV estimate (date mismatch).
  • Ignoring other claims (leases, pensions, non-operating assets/liabilities) when material.

Practical checklist

  • Make sure EV and balance sheet inputs are from the same date/time frame.
  • Cross-check: equity value should be roughly market cap (if public) after adjustments.
  • Use scenarios: EV can change a lot with discount rate and terminal assumptions.

FAQ

If I have equity value, how do I get EV-
Reverse the bridge: EV = equity value + net debt + preferred + minority - other adjustments (depending on how you define adjustments). Consistency in definitions matters more than formulas.
Do I include cash in EV-
By convention, EV represents the operating business value excluding excess cash. That's why cash is added when converting EV to equity value.

More in finance

Valuation modeling hub: WACC, DCF, multiples, and equity value
A practical hub for valuation modeling: estimate a discount rate (WACC), run a simple DCF with sensitivity analysis, and translate enterprise value to equity value.
Multiple valuation: how to use ARR/revenue multiples and avoid mix-ups
A practical guide to multiple-based valuation: choosing a metric, applying EV multiples, and bridging to equity value via net debt.
DCF valuation: forecast cash flows, discount rate, and terminal value
A practical guide to DCF valuation and WACC discount rate choices: how to forecast FCF, choose a discount rate, and avoid terminal value traps.
← Discounted payback period: definition, formula, and how to calculate
Feature adoption rate: definition, how to measure adoption, and pitfalls →