Editing Enterprise value (section)

==Technical considerations==

===Data availability===
Unlike market capitalization, where both the market price and the outstanding number of shares in issue are readily available and easy to find, it is virtually impossible to calculate an EV without making a number of adjustments to published data, including often subjective estimations of value:
* The vast majority of corporate debt is not publicly traded. Most corporate debt is in the form of bank financing, finance leases and other forms of debt for which there is no market price.
* Associates and minority interests are stated at historical book values in the accounts, which may be very different from their market values.
* Unfunded pension liabilities rely on a variety of actuarial assumptions and represent an estimate of the outstanding liability, not a true “market” value.
* Public data for certain key inputs of EV, such as cash balances, debt levels and provisions are only published infrequently (often only once a year in the annual report & accounts of the company).
* Published accounts are only disclosed weeks or months after the year-end date, meaning that the information disclosed is already out of date.

In practice, EV calculations rely on reasonable estimates of the market value of these components. For example, in many professional valuations:
* Unfunded pension liabilities are valued at face value as set out in notes to the latest available accounts.
* Debt that is not publicly traded is usually taken at face value, unless the company is highly geared (in which case a more sophisticated analysis is required).
* Associates & minority interests are usually valued either at book value or as a multiple of their earnings.

===Avoiding temporal mismatches===
When using valuation multiples such as EV/EBITDA and EV/EBIT, the numerator should correspond to the denominator. In other words, the profitability metric in the denominator should be available to all stakeholders represented in the numerator. The EV should, therefore, correspond to the market value of the assets that were used to generate the profits in question, excluding assets acquired (and including assets disposed) during a different financial reporting period. This requires restating EV for any mergers and acquisitions (whether paid in cash or equity), significant capital investments or significant changes in [[working capital]] occurring after or during the reporting period being examined. Ideally, multiples should be calculated using the market value of the weighted average capital employed of the company during the comparable financial period.

When calculating multiples over different time periods (e.g. historic multiples vs forward multiples), EV should be adjusted to reflect the weighted average invested capital of the company in each period.<ref group="note">This is analogous to the way earnings per share (net income / weighted average number of shares) is influenced by changes in the number of shares over different financial years.</ref>