Definition Of Equity Value

The book value of equity is based on stockholders equity which is a line item on the company s balance sheet a company.

Definition of equity value. This measured value is used to determine a business s net worth or the funds that would be left over and available to shareholders if all liabilities and debts were paid off. Equity value means the total net pre tax proceeds which would be received by the holders of units if the assets of the company as a going concern were sold in an orderly transaction designed to maximize the proceeds therefrom and such proceeds were then distributed in accordance with section 4 2 b after payment of or provision for all company obligations in accordance with section 11 2. Equity value is an important number for a business owner to know when selling a business. 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.

Net equity value means at any time the total assets of the applicable business less the total liabilities of such business less the amounts attributable to the minority interest in such business in each case as determined on a consolidated basis in accordance with gaap subject to the last sentence of the definition of capitalization value. Equity value is the value of a company available to owners or shareholders. Information and translations of equity value in the most comprehensive dictionary definitions resource on the web. Meaning of equity value.

The most common use of equity value is to calculate the price earnings ratio price earnings ratio the price earnings ratio p e ratio is the relationship between a company s stock price and earnings per share. This definition has no connection to equity as a measure of value though both terms may be used in business settings. Industries in which equity value is commonly used. It gives investors a better sense of the value of a company.

Equity value also known as market capitalization is the sum total of the values the shareholders have made available for the business and can be calculated by multiplying the market value per share by the total number of shares outstanding. The market value of equity is also distinct from the book value of equity. Net equity value is the fair market value of a business s assets minus its liabilities.