Confusion Regarding the Inclusion of Non-operating Assets to Enterprise Value
Even though in the course video , its mentioned that Non-Operating Assets are added to the EV while arriving to the Equity Value , in the Practice Exam 1 , answer to one of the question is that its included in the Enterprise Value after being valued seperately according to market valuations.
Hi Dhruv,
In theory, the more precise way is to always use a market valuation. When that's not feasible, you'd use the Balance Sheet value of these non-operating assets.
Best,
Ned
Ned, Dhruv is confused regarding the inclusion of non-operating assets to enterprise value. This video shows (at 1:36) that non-operating assets are added to enterprise value, in order to arrive at equity value. However, the course notes adds non-operating assets in the following formula to calculate enterprise value. So the formulas conflict.
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