Market Capitalization and Enterprise Value Quiz

1 point(s)

Which of the following is the formula for calculating Market Capitalization?

Stock Price + Shares Outstanding

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Stock Price x Shares Outstanding

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Stock Price – Shares Outstanding

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Stock Price ÷ Shares Outstanding

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1 point(s)

What does the Enterprise Value (EV) take into account besides Market Capitalization?

Debt and Cash

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Revenue and Profit

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Assets and Liabilities

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Dividends and Capital Gains

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1 point(s)

An investor is comparing two companies within the same industry using Market Capitalization and Enterprise Value. Which company appears to be relatively undervalued if Company A has a Market Cap of $75,000,000 and an Enterprise Value of $80,000,000 while Company B has a Market Cap of $100,000,000 and an Enterprise Value of $110,000,000?

Company A

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Company B

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Both are valued the same

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Cannot be determined

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1 point(s)

Market Capitalization alone gives a full picture of a company’s total value.

True

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False

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1 point(s)

Enterprise Value is calculated as Market Cap + Total Debt – Cash and Cash Equivalents.

True

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False

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1 point(s)

Arrange the following steps in chronological order to find the Enterprise Value: Subtract Cash and Cash Equivalents, Add Total Debt, Multiply Stock Price with Shares Outstanding.

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1 point(s)

Arrange these terms in ascending order of their inclusion in calculating a company’s total value: Market Cap, Cash and Cash Equivalents, Total Debt.

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3 point(s)

Definition

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The total value of a company's outstanding shares of stock
A measure of a company's total value, considering Market Cap, Total Debt, and Cash
The sum of all long-term liabilities of a company

Market Cap

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Enterprise Value

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Total Debt

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3 point(s)

Definition

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The total number of shares held by all its shareholders
The cost of purchasing a single share of a company's stock
Company's assets that are in cash form or can quickly be converted to cash

Shares Outstanding

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Stock Price

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Cash and Cash Equivalents

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1 point(s)

Discuss how the comparison of Market Capitalization and Enterprise Value can be useful in investment analysis.

This response will be awarded full points automatically, but it will be reviewed and possibly adjusted after submission.

Market Capitalization and Enterprise Value Quiz