A listed company has 20,00,000 equity shares trading at a current market price of Rs. 150 per share. Its balance sheet shows preferred share capital of Rs. 4 crore, total debt outstanding of Rs. 6 crore, cash and cash equivalents of Rs. 2 crore, and non-operating financial investments of Rs. 1 crore. What is the Enterprise Value (EV) of the company on a standalone basis?

[ A ]Rs. 40.0 crore

[ B ]Rs. 30.0 crore

[ C ]Rs. 37.0 crore[ CORRECT ]

[ D ]Rs. 43.0 crore

Takeaway

Option C is correct: Rs. 37.0 crore

Derivation

Enterprise Value (EV) reflects the total operating value of a business. Formula: EV = Market Value of Common Equity + Market Value of Preferred Capital + Market Value of Debt - (Cash & Cash Equivalents + Non-operating Financial Investments). Calculations: Market Cap = 20,00,000 shares * Rs. 150 = Rs. 30.0 crore. Total additions = Market Cap (30.0) + Preferred Capital (4.0) + Debt (6.0) = Rs. 40.0 crore. Deductions = Cash (2.0) + Financial Investments (1.0) = Rs. 3.0 crore. EV = Rs. 40.0 crore - Rs. 3.0 crore = Rs. 37.0 crore. This tests standalone EV computation mechanics. The primary mistake is failing to deduct cash or ignoring preferred capital.

Why the others fail

A — Rs. 40.0 crore

Rs. 40.0 crore erroneously omits the deduction of cash (Rs. 2 cr) and non-operating financial investments (Rs. 1 cr).

B — Rs. 30.0 crore

Rs. 30.0 crore represents only the equity market capitalization, completely ignoring debt and preferred capital obligations.

D — Rs. 43.0 crore

Rs. 43.0 crore incorrectly adds cash and investments to the capital base rather than subtracting liquid non-operating assets.