Home Depot Enterprise Value vs Invested Capital Analysis

Enterprise Value vs Invested Capital

Enterprise Value

Enterprise Value (or EV) is usually referred to as Home Depot theoretical takeover price. In the event of an acquisition, an acquirer would have to take on The Home Depot debt, but would also pocket its cash. Enterprise Value is more accurate representation of Home Depot value then its market capitalization because it takes into account all of The Home Depot Inc existing debt. Enterprise value is a measure of the value of a business as a whole, calculated as Market Capitalization plus Total Debt USD minus Cash and Equivalents USD.

Invested Capital

Invested capital represents the total cash investment that shareholders and debt holders have contributed to The Home Depot Inc. There are two different methods for calculating The Home Depot invested capital: operating approach and financing approach. Understanding ##company1# invested capital allows investors to to calculate measures of performance such as return on invested capital or return on capital employed. Invested capital is an input into the calculation of Return on Invested Capital, and is calculated as: Total Debt plus Total Assets minus Goodwill and Intangible Assets minus Cash and Equivalents minus Current Liabilities. Please note this calculation method is subject to change.

Accounts Relationship

Enterprise Value vs Invested Capital

Significance: Weak Relationship

Overlapping area represents amount of trend that can be explained by analyzing historical patterns of The Home Depot Enterprise Value account and Invested Capital

Correlation Coefficient

0.32
Relationship DirectionPositive 
Relationship StrengthVery Weak