Question

A firm's enterprise value is equal to the market value of its debt and equity, less the firm's holdings of cash and cash equivalents. This figure is particularly relevant to potential purchasers of the firm. Why? 

   A firm's enterprise value is equal to the market value of its debt and equity, less the firm's holdings of cash and cash equivalents. This figure is particularly relevant to potential purchasers of the firm. Why?
Fundamentals of Corporate Finance
Fundamentals of Corporate Finance
Stephen A. Ross;… 11th Edition
Chapter 2, Problem 11 ↓

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Enterprise value is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization. It is calculated as the market value of equity (market capitalization) plus the market value of debt, minus cash and cash  Show more…

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A firm's enterprise value is equal to the market value of its debt and equity, less the firm's holdings of cash and cash equivalents. This figure is particularly relevant to potential purchasers of the firm. Why?
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