Enterprise value to invested capital (EV/IC)
What the market pays for the whole company relative to the capital actually put into it.
Read next to the return on that capital, it is the cleanest statement of whether the market is paying up for genuine value creation.
How it is computed here
(Market capitalisation + total debt - cash) / (shareholders equity + total debt - cash)
Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business. Filed under value. Neither a high nor a low reading is good on its own, so it is never coloured as one.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Only interpretable alongside return on invested capital. A high multiple on high returns is ordinary; a high multiple on low returns is not.
- Invested capital carries the same historical-cost problem as book value.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is enterprise value to invested capital calculated?
(Market capitalisation + total debt - cash) / (shareholders equity + total debt - cash). Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business.
What does enterprise value to invested capital tell a value investor?
Read next to the return on that capital, it is the cleanest statement of whether the market is paying up for genuine value creation.
When does enterprise value to invested capital mislead?
Only interpretable alongside return on invested capital. A high multiple on high returns is ordinary; a high multiple on low returns is not. Invested capital carries the same historical-cost problem as book value.