Enterprise value refers to the value of the enterprise itself, which is a market evaluation of the tangible and intangible assets of the enterprise. Enterprise value is different from profit, which is a part of the value created by the market value of all assets of the enterprise, and enterprise value does not refer to the total value of the book assets of the enterprise. Due to the existence of corporate goodwill, the actual market value of an enterprise usually far exceeds the book asset value.
It is the present value of an enterprise's expected free cash flow discounted according to its weighted average capital cost, which is closely related to the financial decision-making of the enterprise and reflects the time value, risk and sustainable development ability of the enterprise's capital.
Extending to the field of management, enterprise value can be defined as the ability of enterprises to follow the law of value and make all stakeholders (including shareholders, creditors, managers, ordinary employees, government, etc.) of enterprises. ) Get satisfactory returns through value-centered management. Obviously, the higher the enterprise value, the higher its ability to give returns to stakeholders. And this value can be measured by its economic definition.