EVQ EV

Question 1

CEO finding $100 of cash in the ground. EV and EQV change

Answer 1

1. EQV increase 100 because the increase was attributed to Equity on the Balance sheet
2. EV no change: cash is not a core-business asset

Question 2

Raising and paying off Debt

Answer 2

1. No change for both EQV and EV.
2. EV: cash balance offset the change in Debt; EQV: does not impact a company’s Equity

Question 3

Issuing and repurchasing shares

Answer 3

1. Change in EQV
2. No change in Enterprise value

Question 4

Issuing common or preferred dividends

Answer 4

1.Issue dividends reduce EVQ (RE decrease)
2. EV doesn’t change because the cash and equity offset each other