How do you convert Enterprise Value into a per share price for a public company?

To convert Enterprise Value (EV) into a per share price for a public company, the process involves understanding the components of EV and how they relate to equity value. The correct answer involves adding cash and subtracting debt from the Enterprise Value. This is essential because Enterprise Value represents the total value of a company as perceived by all stakeholders, including equity and debt holders.

To derive the equity value from the EV, you need to isolate the value attributable solely to shareholders. By adding cash and subtracting debt, you adjust the enterprise value to reflect only the net worth of the shareholders. This results in the equity value, which can then be divided by the number of shares outstanding to ascertain the per share price.

This approach effectively acknowledges the impact of debt and cash on the company's value, enabling a more accurate representation of the equity that shareholders would receive.

The other options, while tangentially related to the valuation, do not provide the correct method for converting Enterprise Value into a per share price. For example, multiplying EV by the number of shares outstanding does not yield any meaningful measure, as EV is already a headline figure and should not be multiplied in that manner. Sticking to book value calculations does not take current market conditions into account,