medium · Investment Banking implied-share-price
A technology firm has a Market Capitalization of $2,000 million. It carries no debt but has a cash balance of $350 million.
What is the firm's Enterprise Value, and how is it interpreted?
- $1,650 million; the net cost to acquire the firm's operating business.
- $1,300 million; the value of the firm assuming it must maintain a minimum cash balance.
- $2,000 million; the market's valuation of the equity regardless of cash levels.
- $2,350 million; the cost to acquire the firm's equity and its cash reserves.
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