Question: Enterprise value is considered comprehensive when valuing a company because, if a company were to purchase Macy's outstanding shares for $7.44 billion, it would also

Enterprise value is considered comprehensive when valuing a company because, if a company were to purchase Macy's outstanding shares for $7.44 billion, it would also have to settle Macy's $3.30 billion in outstanding debts.

In total, the acquiring company will spend more than $10 billion to purchase Macy's. However, since Macy's has $1.71 billion in cash, this amount could be added to repay the debt.

How Do You Calculate Enterprise Value?

To calculate market capitalization, multiply the number of outstanding shares by the current stock price. Next, total all debt on the company's balance sheet. Finally, add the market capitalization to the total debt and subtract any cash and cash equivalents from the result.

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