Equity value

Equity value is the value of a company available to owners or shareholders. It is the enterprise value plus all cash and cash equivalents, short and long-term investments, and less all short-term debt, long-term debt and minority interests.[1][2]

Equity value accounts for all the ownership interest in a firm including the value of unexercised stock options and securities convertible to equity.

From a mergers and acquisitions to an academic perspective, equity value differs from market capitalization or market value in that it incorporates all equity interests in a firm whereas market capitalization or market value only reflects those common shares currently outstanding.[3]

## Calculating equity value

Equity value can be calculated in two ways, either the intrinsic value method, or the fair market value method. The intrinsic value method is calculated as follows:

Equity Value =
Market capitalization
+ Amount that in-the-money stock options are in the money
+ Value of equity issued from in-the-money convertible securities
- Proceeds from the conversion of convertible securities

The fair market value method is as follows:

Equity Value =
Market capitalization
+ fair value of all stock options (in the money and out of the money), calculated using the Black–Scholes formula or a similar method
+ Value of convertible securities in excess of what the same securities would be valued without the conversion attribute

The fair market value method more accurately captures the value of out of the money securities.

* v
* t
* e

Financial markets

Types of markets|

* Primary market
* Secondary market
* Third market
* Fourth market

Types of stocks|

* Common stock
* Golden share
* Preferred stock
* Restricted stock
* Tracking stock

Share capital|

* Authorised capital
* Issued shares
* Shares outstanding
* Treasury stock

Participants|

* Broker-dealer
* Day trader
* Floor broker
* Floor trader
* Investor
* Market maker
* Proprietary trader
* Quantitative analyst
* Financial law
* Regulator
* Stock trader

Exchanges|

* Electronic communication network
* List of stock exchanges
* Trading hours
* Multilateral trading facility
* Over-the-counter

Stock valuation|

* Alpha
* Arbitrage pricing theory
* Beta
* Bid–ask spread
* Book value
* Capital asset pricing model
* Capital market line
* Dividend discount model
* Dividend yield
* Earnings per share
* Earnings yield
* Net asset value
* Security characteristic line
* Security market line
* T-model

Trading theories
and strategies|

* Algorithmic trading
* Buy and hold
* Contrarian investing
* Day trading
* Dollar cost averaging
* Efficient-market hypothesis
* Fundamental analysis
* Growth stock
* Market timing
* Modern portfolio theory
* Momentum investing
* Mosaic theory
* Pairs trade
* Post-modern portfolio theory
* Random walk hypothesis
* Sector rotation
* Style investing
* Swing trading
* Technical analysis
* Trend following
* Value averaging
* Value investing

Related terms|

* Block trade
* Cross listing
* Dark pool
* Dividend
* Dual-listed company
* DuPont analysis
* Efficient frontier
* Flight-to-quality
* Government bond
* Haircut
* Initial public offering
* Long
* Margin
* Market anomaly
* Market capitalization
* Market depth
* Market manipulation
* Market trend
* Mean reversion
* Momentum
* Open outcry
* Position
* Public float
* Public offering
* Rally
* Returns-based style analysis
* Reverse stock split
* Share repurchase
* Short selling
* Slippage
* Speculation
* Stock dilution
* Stock exchange
* Stock market index
* Stock split
* Trade
* Uptick rule
* Volatility
* Voting interest
* Yield

## References

1. ↑ "Equity Value" (in en-US). https://corporatefinanceinstitute.com/resources/valuation/what-is-equity-value/.
2. ↑ "Equity value" (in en-GB). http://uk.practicallaw.thomsonreuters.com/4-554-3066?transitionType=Default&contextData=(sc.Default)&firstPage=true.
3. ↑ "Enterprise Value vs Equity Value" (in en-US). https://mergersandinquisitions.com/enterprise-value-vs-equity-value/.

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