Equity Value vs.

Enterprise Value - Issuing and Repurchasing Shares, and Issuing and Re

($ in Million Except Per Share Data)

Key Point of This Lesson: No matter how a company is financed, its Enterprise Value stays the sa
Equity Value, however, may change depending on the mix of equity vs. debt vs. cash.

As a result, Enterprise Value-based valuation multiples will NOT change even when a company's fin
changes - at least, immediately after that change.

It's just like when you buy a house - house is worth $500K regardless of whether you pay with all ca
and 50% debt, or anything else in between but depending on how much cash and debt you use, y
THAT HOUSE will be different. The $500K total value of the house is like the Enterprise Value for a c

This example uses Coca-Cola's filings and financial statements - you can find them and try this your
http://www.coca-colacompany.com/investors/annual-other-reports
http://www.coca-colacompany.com/investors/investors-info-quarterly-filings

NOTE: This example ignores after-market effects, e.g. if the company issues shares we assume its s
the same but it might increase or decrease because of the market signal it sends.

So these examples are strictly from an ACCOUNTING perspective and are designed to help you answ

Coca-Cola - Equity Value, Enterprise Value, and Financial Data: What if Coca-Cola Issues
Current Share Price:
$
37.77
Cash Changes By:
Diluted Shares Outstanding (Millions):
4,527
Debt Changes By:
Equity Changes By:
Equity Value:
Cash & Cash-Equivalents:
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interests:
Enterprise Value:
TTM EV / Revenue:
TTM EV / EBITDA:
TTM P / E (Equity Value / Net Income):

$ 170,985
(16,040)
(9,511)
35,686
3,011
408
$ 184,539
3.9 x
14.6 x
19.9 x

Equity Value:
Cash & Cash-Equivale
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interes
Enterprise Value:

TTM EV / Revenue:
TTM EV / EBITDA:
TTM P / E (Equity Value / N

Key Takeaways:

When you raise debt or equity or pay off debt or repurchase shares, Enterprise Value does NOT ch
And neither do Enterprise Value-based multiples.

(Both of them can and do change after that as the market responds - but these scenarios are for i

Equity Value and Equity Value-based multiples, however, do change as a result of these financing

Which is yet another reason why Enterprise Value and EV-based multiples are so important (for m

and Issuing and Repaying Debt

ise Value stays the same.

when a company's financing

er you pay with all cash or 50% cash

h and debt you use, your own EQUITY IN
terprise Value for a company.

hem and try this yourself right here:

hares we assume its share price stays

gned to help you answer interview questions.

if Coca-Cola Issues $10,000 of Shares?

h Changes By:
$
10,000
t Changes By:
ity Changes By:
10,000

ity Value:
Cash & Cash-Equivalents:
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interests:
erprise Value:
EV / Revenue:
EV / EBITDA:
P / E (Equity Value / Net Income):

$ 180,985
(26,040)
(9,511)
35,686
3,011
408
$ 184,539
3.9 x
14.6 x
21.0 x

se Value does NOT change immediately afterward

What if It Raises $10,000 in Debt?

Cash Changes By:
Debt Changes By:
Equity Changes By:
Equity Value:
Cash & Cash-Equivalents:
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interests:
Enterprise Value:
TTM EV / Revenue:
TTM EV / EBITDA:
TTM P / E (Equity Value / Net Income):

ese scenarios are for interview questions.)

ult of these financing differences.

e so important (for most industries).

10,000
10,000
-

$ 170,985
(26,040)
(9,511)
45,686
3,011
408
$ 184,539
3.9 x
14.6 x
19.9 x

What if It Repurchases $10,000 of Shares?

Cash Changes By:
$ (10,000)
Debt Changes By:
Equity Changes By:
(10,000)
Equity Value:
Cash & Cash-Equivalents:
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interests:
Enterprise Value:
TTM EV / Revenue:
TTM EV / EBITDA:
TTM P / E (Equity Value / Net Income):

$ 160,985
(6,040)
(9,511)
35,686
3,011
408
$ 184,539
3.9 x
14.6 x
18.7 x

What if It Repays $10,00

Cash Changes By:
Debt Changes By:
Equity Changes By:

Equity Value:
Cash & Cash-Equivale
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interes
Enterprise Value:

TTM EV / Revenue:
TTM EV / EBITDA:
TTM P / E (Equity Value / N

if It Repays $10,000 of Debt?

h Changes By:
t Changes By:
ity Changes By:

ity Value:
Cash & Cash-Equivalents:
Equity Investments:
Total Debt:
Unfunded Pensions:
Noncontrolling Interests:
erprise Value:
EV / Revenue:
EV / EBITDA:
P / E (Equity Value / Net Income):

(10,000)
(10,000)

$ 170,985
(6,040)
(9,511)
25,686
3,011
408
$ 184,539
3.9 x
14.6 x
19.9 x