What’s The Difference Between Enterprise Value And Clean Enterprise Value?

What’s the difference between enterprise value, equity value and clean enterprise value? All of these multiples are used in the process of security analysis but as UBS’s fundamental equity analysts Geoff Robinson and Guy Weynes discuss in their research booklet, “How to…analyze and talk the language of multiples” these three metrics all require varying degrees of scrutiny before use.

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Enterprise value or EV is the cost of buying the right to the whole of an enterprise’s core cash flow. It is equal to the estimated value of the operations of an enterprise as represented by the value of the various claims on cash flow and profit. A basic enterprise value can be defined as equity value plus net debt plus the value of minority businesses and other provisions deemed as debt, such as pension provisions.