There are a number of ways to estimate the market value of a company. The most common approach is to consider market capitalization (which is simply share price multiplied by the number of shares outstanding). However, this approach only takes into account the equity of the firm.
Investors should also be concerned with the impact of debt on the company. Enterprise value, which is an estimate of “takeover” cost (i.e., the amount it would cost another firm to acquire the company), accounts for the offsetting effect of long term debt as well as cash reserves. The basic calculation is:
EV = Market Cap + Long Term Debt - Cash
More specifically:
EV = Market Cap + Long Term Debt + Minority Interest + Preferred Shares - Cash & Cash Equivalents
Note that minority interest and preferred shares are typically included as well (they have the same effect as Long Term Debt) along with cash equivalents (which have the same effect as cash). Long term debt would be a “cost” to the acquiring company since it would have to pay this money back. The cash component, however, offsets this cost (since the acquirer now owns these cash reserves).