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Equity value

What is left for shareholders once the lenders have been paid.

Updated 2026-09-03

How it is calculated

Equity value = enterprise value − net debt

Equity value is what is left for shareholders once the lenders have been paid. It is the last whole-company figure before the valuation is divided by the share count.

equity value = enterprise value − net debt

See enterprise value and net debt. Net cash is a negative net debt, so it adds here rather than subtracting.

The step exists because a DCF values the business, not the shares. Debt holders have a prior claim on the cash the projection counted, so their claim comes off. Cash the company already holds was never in the projection at all, so it is added back.

On a heavily indebted company this step can be most of the answer. If equity value comes out negative, Angie publishes no value rather than a negative price per share, because a going concern cannot be worth less than nothing and the honest conclusion is that a DCF is the wrong tool for it.

See also

  • Enterprise value — The value of the whole operating business, before asking who has a claim on it. Debt holders are paid before shareholders, so this is not yet what the shares are worth.
  • Net debt — Positive means a net borrower, negative means net cash. Subtracted from enterprise value to reach what shareholders own.
  • Intrinsic value — Angie's estimate of what one share is worth, built from the company's own cash rather than from what anyone will pay. Compare it to today's price.

← See this one in the deck

Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

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