> ## Documentation Index > Fetch the complete documentation index at: https://docs.chicago.global/llms.txt > Use this file to discover all available pages before exploring further. # Enterprise Value > Understanding enterprise value - the value of the operating business itself, before deciding who owns the claims on it Enterprise value is what the operating business is worth, independent of how it is financed. Equity value is what is left for shareholders after the lenders and other senior claimants are paid. ## Beginner ### What It Means Think of buying a house that carries a mortgage. The price of the house is one number. What you actually put in as your own money is that price minus the mortgage you take over. Enterprise value is the house. Equity value is your stake in it. ### Example A company's operating business is worth 1,000. It carries 300 of debt and holds 50 of cash it does not need to run the business. Its net debt is therefore 300 − 50 = 250, and equity value is 1,000 − 250 = 750. Divide that by the diluted share count and you have value per share. ### Why It Matters Two companies can have identical operating businesses and very different share prices, purely because one borrowed more. Enterprise value lets you compare the businesses. Equity value tells you what the shares are worth once the financing is accounted for. *** ## Advanced ### How to Read It `Enterprise value = present value of explicit FCFF + present value of continuing value` `Equity value = enterprise value − net debt − senior obligations + other non-operating assets` Net debt is gross debt less surplus cash, so the cash is already accounted for. The senior-obligations term covers only claims not already inside net debt. If leases, pension deficits or supplier finance are carried in net debt, subtracting them again double counts them the same way. The final term covers non-operating assets **other than** that cash, such as an idle property or a minority stake in a listed company. Adding surplus cash again here would count it twice. `Value per share = equity value / diluted equivalent shares outstanding` The step from enterprise value to value per share is called the bridge. It reconciles operating value with the claims attributable to common shareholders. Senior obligations include more than bank debt: leases, pension deficits, supplier-finance arrangements and minority interests can all sit ahead of common shareholders. ### Common Misreadings * **Using the listed share count instead of the issuer-wide count**: multiple share classes, depositary receipts and dual listings can make the ticker-level count a fraction of the true economic denominator, which inflates value per share. * **Mixing bases across the bridge**: equity value and quoted share price must use the same currency for comparison. Convert the implied value per share from reporting currency to trading currency, with any depositary-receipt ratio applied consistently. * **Counting surplus cash twice**: if net debt is used, the cash is already in the bridge. Adding it again as a non-operating asset overstates equity value by the full amount of that cash. * **Treating all cash as non-operating**: a business needs working cash to run. Only genuine surplus reduces net debt. ### In Parallax Reports Parallax carries a dated share denominator through the bridge for every company it values, and reconciles net debt per share against total net debt, share count and the currency conversion before any enterprise-value multiple is allowed to determine a target. See [Financial Statement Reconstruction](/methodology/valuation/financial-statements) for the security-identity checks. ### Related Terms The cash stream enterprise value discounts The capital base that produces it The rate it is discounted at