With the sale of Formula 1 to Liberty Media Corporation, we see a lot of news articles speaking to the Formula 1 Enterprise Value of $8 billion, with the equity value being $4.4 Billion.
What is the difference between Enterprise Value and Equity Value you ask?
Equity Value is the simplest form is the total outstanding shares of a company (Market Cap) and can be calculated using the current value per each share outstanding.
As an example, if “Example Company Ltd” had 10,000 outstanding shares with a share price of $10.00, the Equity Value of the company would be $100,000.
The equity value alone typically will not give you an accurate representation of the TRUE value of a company.
Enterprise Value will represent the market value of the…