At the close on 29 May 2026, the last trading day of Oracle's fiscal year, the stock market priced all of Oracle's shares at $650.2 billion. Adding its debt and its other financial obligations, then taking off its cash, gives an enterprise value of $761.1 billion.
That second figure is enterprise value (EV). This explainer shows how it is built and where each input sits in an annual report. It also shows what EV answers that market capitalisation does not. The examples use annual reports for fiscal years that ended between December 2025 and May 2026.
What is enterprise value? Enterprise value (EV) is the price of a company's whole business. It equals market capitalisation (the combined value of all its shares) plus debt and similar obligations, minus cash.
Market capitalisation values only the shares. EV also counts what the company owes lenders and other outside investors. It credits the cash the company holds.
Two companies with the same market capitalisation have different EVs when their debt and cash differ.
EV matches profit earned before lenders are paid, such as operating income (profit from the business before interest and tax). Market capitalisation matches profit left after lenders are paid, such as net income.
Market capitalisation and enterprise value: what each one counts
Market capitalisation is the share price multiplied by the number of shares outstanding. Shares outstanding exclude shares that the company has bought back and holds itself. The result measures the equity, which is the part of the business that shareholders own.
Equity is not the whole business. Lenders have also put money in. That money pays for the company's assets. A buyer of every share would take over the debt. The buyer would also receive the company's cash.
The enterprise value formula, piece by piece
Enterprise value = market capitalisation + debt + finance lease liabilities + preferred shares + non-controlling interests − cash and marketable securities.
Market capitalisation is the claim of ordinary shareholders: the share price times the shares outstanding.
Debt covers bonds, loans and commercial paper (borrowing that falls due within a year). A buyer of the whole company takes on these debts.
Finance lease liabilities are payments owed on leased equipment or buildings under contracts that work like borrowing.
Preferred shares rank ahead of ordinary shares for payouts, so they are a claim on the business.
Non-controlling interests are the parts of consolidated subsidiaries (subsidiaries whose results the company reports in full) that outsiders own. The company reports all of those subsidiaries' profit, so EV must include the outsiders' share of their value.
Cash and marketable securities (investments that can be sold quickly) are subtracted because they could repay debt at once. Debt minus cash is called net debt.
Where each input sits in an annual report
Every input except the share price comes from the annual report (Form 10-K). The balance sheet shows cash, marketable securities, debt and non-controlling interests. Its equity section gives the shares outstanding and any preferred shares. The lease note separates finance leases from operating leases, which are leases whose cost is treated as rent.
The share price is the closing price on the balance sheet date, or on the last trading day before it. Using one date for both sides keeps the figures consistent.
The enterprise value formula, applied to Oracle
Oracle's fiscal year ended on 31 May 2026 (fiscal 2026). Chart 1 applies the formula to its balance sheet at that date.
Source: Oracle Form 10-K, fiscal 2026; YX Insights
Market capitalisation was $650.2 billion. Debt added $129.5 billion, finance leases $7.7 billion, preferred shares $5.0 billion and non-controlling interests $0.5 billion. Cash and marketable securities took off $31.9 billion, which leaves $761.1 billion. The pieces are rounded to one decimal place, so they may not add exactly to the total.
What enterprise value shows that market capitalisation does not
The table applies the formula to NVIDIA (fiscal 2026), Oracle (fiscal 2026) and ExxonMobil (fiscal 2025). Each uses its own balance sheet date and share price date, so the gaps below are not a ranking.
ExxonMobil reports most of its finance lease liabilities inside its debt. Of its $2,659 million, $2,543 million sits in the debt lines, so none is added for it. The other $116 million sits in other lines and is left out.
$ million unless stated | NVIDIA | Oracle | ExxonMobil |
|---|---|---|---|
Balance sheet date | 25 January 2026 | 31 May 2026 | 31 December 2025 |
Share price date | 23 January 2026 | 29 May 2026 | 31 December 2025 |
Closing share price | $187.67 | $225.78 | $120.34 |
Shares outstanding (million) | 24,304 | 2,880 | 4,179 |
Market capitalisation | 4,561,132 | 650,246 | 502,901 |
Debt | 8,468 | 129,541 | 43,537 |
Finance lease liabilities added | 0 | 7,701 | 0 |
Preferred shares | 0 | 4,954 | 0 |
Non-controlling interests | 0 | 548 | 7,240 |
Cash and marketable securities | 62,556 | 31,894 | 10,681 |
Enterprise value | 4,507,044 | 761,096 | 542,997 |
Source: NVIDIA, Oracle and ExxonMobil Form 10-K filings; YX Insights.
Market capitalisation uses shares outstanding at the balance sheet date. A diluted share count would change the figures. For Oracle, a count of 2,914 million shares would give a gap of 16.8% instead of 17.0%.
NVIDIA holds more cash and marketable securities ($62.6 billion) than debt ($8.5 billion). Its EV of $4.51 trillion is 1.2% below its market capitalisation of $4.56 trillion.
Oracle sits at the other end. Its debt, finance leases, preferred shares and non-controlling interests total $142.7 billion, against $31.9 billion of cash and marketable securities. Its EV is 17.0% above its market capitalisation.
ExxonMobil falls between the two. Its debt of $43.5 billion and non-controlling interests of $7.2 billion exceed its cash of $10.7 billion. Its EV is 8.0% above its market capitalisation.
Source: NVIDIA, Oracle and ExxonMobil Form 10-K filings; YX Insights
Chart 2 puts the three gaps on one scale. A bar to the right means net claims exceed cash, so EV is larger than market capitalisation. A bar to the left means cash exceeds the claims.
Why EV pairs with profit before interest
Operating income is profit from the business before interest and tax. EBITDA is operating income plus depreciation and amortisation, which are the accounting charges for assets. Both are measured before interest, so lenders and shareholders share them.
EV is the price of both groups' claims, so it is the matching figure to divide by them. The multiple EV divided by EBITDA is explained in EV/EBITDA Explained: What It Measures and What It Hides.
Net income is what remains for shareholders after interest. Market capitalisation is the matching figure. This is how the price-to-earnings ratio works.
When enterprise value misleads
EV is a snapshot built from judgement calls. Four cases need care.
Operating leases. Under US accounting, the cost of an operating lease already sits inside operating profit. Oracle's operating lease liabilities were $30.2 billion and its operating lease cost was $2.8 billion. This EV leaves the liabilities out.
Adding them would raise Oracle's EV by 4.0%. Profit would still be measured after the lease cost. EV and profit would then count leases in different ways.
Cash and investments. NVIDIA held $22.3 billion of non-marketable equity securities, which are investments in companies whose shares do not trade on an exchange. The table does not subtract them. Counting them would lower its EV by 0.5%. Cash and investments differ in how quickly they turn into cash.
An old balance sheet. Oracle's debt was $92.6 billion at 31 May 2025 and $129.5 billion at 31 May 2026, a rise of about $37 billion. An EV built from the older balance sheet would miss that rise.
Share counts. NVIDIA had 24,304 million shares outstanding at year-end. Its diluted weighted-average count was 24,514 million. This is the average over the year, with the shares that options and share awards could create added. Against its basic weighted-average count of 24,359 million, the options and awards add 0.6%.
Enterprise value prices the whole business, while market capitalisation prices only the shares. In the three companies here, the gap between the two ran from 1.2% below to 17.0% above, on the dates in the table.
Related reading. A Discounted Cash Flow (DCF) model adds up the cash a business is expected to produce, each amount reduced for the time before it arrives. How to value a stock sets out the method. What is free cash flow covers the cash flow it uses.
Common questions about enterprise value
What is enterprise value in simple terms?
Enterprise value is the price of a company's whole business. Take the combined value of all shares, add debt and similar obligations, then subtract cash. A buyer of the whole company would pay the shareholders, take on the debt and receive the cash.
How do you calculate enterprise value?
Add debt, finance lease liabilities, preferred shares and non-controlling interests to market capitalisation. Then subtract cash and marketable securities. The share price and the balance sheet should come from the same date, so that both sides of the sum describe one day.
Can enterprise value be lower than market capitalisation?
Yes. EV is lower when cash and marketable securities exceed debt and the other claims. At the close on 23 January 2026, NVIDIA's EV was 1.2% below its market capitalisation. It held $62.6 billion of cash and marketable securities against $8.5 billion of debt.
Why does enterprise value subtract cash?
Cash can repay debt, so a buyer's net cost is the price paid less the cash received. Subtracting cash also stops a cash-rich company from looking larger than its operating business. This is why debt minus cash, called net debt, is the figure used.
Is enterprise value the same as market capitalisation?
No. Market capitalisation values only the shares. Enterprise value values the whole business, so it also includes debt and other claims and takes off cash. The two match when a company's debt and other claims equal its cash. A company with none of the three is one example.
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