Facebook Invested Capital vs Enterprise Value Analysis

Invested Capital vs Enterprise Value

Invested Capital

Invested capital represents the total cash investment that shareholders and debt holders have contributed to Facebook Inc. There are two different methods for calculating Facebook Inc 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.

Enterprise Value

Enterprise Value (or EV) is usually referred to as Facebook theoretical takeover price. In the event of an acquisition, an acquirer would have to take on Facebook Inc debt, but would also pocket its cash. Enterprise Value is more accurate representation of Facebook value then its market capitalization because it takes into account all of Facebook 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.

Accounts Relationship

Invested Capital vs Enterprise Value

Significance: Almost Identical Trend

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

Correlation Coefficient

0.93
Relationship DirectionPositive 
Relationship StrengthVery Strong