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Finance Glossary

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Enterprise Value


When you ask the question "What would it take to replace this thing right now?" you get the enterprise value. The number is used when deciding the total value of a business, usually. Insurance companies also consider it when deciding how much coverage a business needs.


Let's say you set up a food truck selling anchovy sandwiches. The truck and everything in it set you back $100,000. You put down $50,000, and a bank gave you a business loan of $50,000. The equity value of the business is $50,000 because you've got debt, but the enterprise value is $100,000—that's what it would cost to replace everything and keep truckin' with the 'chovies.