Forum Topics Enterprise Value
juneauquan
Added 3 months ago

Reading through Cosol's FY24 presentation (page 15) and their Enterprise Value calculation had me thinking 'oh my gosh, I have been calculating Enterprise Value (EV) wrong my whole life'

I have always calculated EV as Market Cap + Debt - Cash

But here Cosol have calculated EV as Market Cap - Net Debt

After gathering my thoughts and realising people other than myself make mistakes, I am 99.9% sure Cosol is wrong

I am also assuming it is 'Net Debt' and not 'Net Cash'

Either way an error


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Solvetheriddle
Added 3 months ago

@juneauquan probably a typo unless they mean a negative plus a negative gives a positve ND, lol

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Bear77
Added 3 months ago

Enterprise Value (EV) = Equity Value (QV) + Net Debt (ND)

Source: https://www.wallstreetprep.com/knowledge/common-topics-of-confusion-for-investment-banking-analysts/

However, they're not using equity value there, they're using market value (share price x shares on issue), which is not the same thing.

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edgescape
Added 3 months ago

Definitely not a good look when you mix up net debt with cash.

Maybe that mistake is why it is down 8% today.


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Bear77
Added 3 months ago

Looking through their results announcement and presentation today @edgescape Cosol DO have $13.7m of net debt (not cash), so they haven't mixed it up. I think the confusion is that they're deducting that from their market cap (which they are calling market value) rather than their Equity Value from their accounts. I think they are suggesting that the market is valuing them at $188.6m once you deduct their net debt from their market cap, i.e. what the market thinks the business is worth after all their debt is paid off rather than what their accounts suggest it is worth.

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edgescape
Added 3 months ago

@Bear77

Cheers for that. Hard one to work out.

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