Enterprise value
The value of the operating business before separating financing choices such as debt and cash.
Concept
Valuation connects business quality with expected cash flows.
A company is valuable when it can convert revenue into sustainable free cash flows while protecting growth, margins, and return on capital.
Equity value
The value that belongs to shareholders after adjusting enterprise value for debt, cash, and other claims.
Growth quality
Growth is valuable when it is profitable, cash backed, and not bought through weak pricing.
Risk
Risk changes the discount rate, the selected multiple, and the width of the valuation range.