Equity value

Equity value is what a company's shares, as a whole, are worth, the slice of the business that belongs to shareholders. It is distinct from enterprise value, which values the entire business, debt included.

The formula is:

Debt holders have first claim on a company's assets and cash flow ahead of shareholders, so debt gets subtracted. Cash on the balance sheet effectively already belongs to shareholders, so it gets added back.

Divide equity value by shares outstanding and the result is a fair value per share, a single estimate of what each share is worth that can be compared directly against the stock's actual trading price.