What is the difference between Enterprise Value and Market Capitalization?



I saw two posts about Tesla compared to the other top 10 car companies. One comparison showed Tesla as larger than the other 10, one showed it lower. Why is this?

In: Economics

Market cap is just the number of common shares of stock * the current stock price.

Enterprise value is that, plus [several other things](https://en.wikipedia.org/wiki/Enterprise_value#EV_equation) like debt, preferred stock, and pension liabilities, minus cash and the value of associate companies (other companies that the company owns a significant amount of, but less than a majority). EV is essentially the cost to completely purchase a company from everyone who has any claim on it, not just stockholders.

For Tesla, those numbers are almost the same, but for other companies, EV is often much larger (though it can be lower if the company has a lot of cash).

Of course, the difference could also just be when the posts were made, since Tesla’s value has increased 20% in just the last week.