Deep Dive: Enterprise Value vs Market Cap — What Investors Get Wrong About Company Size
When investors talk about how big a company is, they almost always cite market capitalisation. Apple is a $3.9 trillion company. AT&T is a $198 billion company. These numbers are technically correct, but they tell a dangerously incomplete story. Market cap measures what equity shareholders own. Enterprise value measures what you would actually have to pay to acquire the entire business — its equity, its debt, and the cash you would pocket on day one. The distinction matters more than most investors realise. AT&T's market cap is $198 billion, but its enterprise value is closer to $354 billion because the company carries $174 billion in debt. Alphabet's market cap is $3.8 trillion, but its enterprise value is actually lower — around $3.76 trillion — because it sits on a $127 billion cash pile that exceeds its debt. These are not academic differences. They change how you rank companies, how you compare valuations, and whether a stock is actually cheap or expensive. This guide breaks down exactly how enterprise value works, when to use it instead of market cap, and how real balance sheet data from the largest companies in the market reveals a picture that share prices alone cannot provide.