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Enterprise value

The value of a firm's operations: equity value plus interest-bearing debt minus surplus cash. It is the claim on the business before asking who funded it.

Equity is the residual claim. Debt is a fixed claim on the same operations. Cash you could hand back without breaking the operations is not part of those operations, so it comes off. What remains is enterprise value.

A DCF built on unlevered cash flows should be compared with this object, not with equity value. Mixing the two is how a model prices the debt twice.

EV over EBITDA is a multiple, not a price. The enterprise value calculator runs the three-line identity. The DCF calculator produces the same object from discounted cash flow.

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