Posted by sense maker > 2013-12-07 17:52 | Report Abuse

EVM is widely used by businessmen looking to acquire a controlling stake in a company because net cash or debt affects their financing or cash flow planfor the acquired company post-acquisition.

But there is a pitfall small investors should be aware of when using it. There are some companies that sit on big cash for decades without making dividend distribution. Companies with very high net cash per share, some higher than market price per share, would have negative or < 1 EVM, although their profitability gauges are super low (like ROE, ROA).

Posted by houseofordos > 2013-12-07 18:45 | Report Abuse

-ve enterprise value means net cash per share more than share price... if the company is not tightly held... will be targetted by corporate raiders who can privatize the company for free...