What is the meaning of "full R value" in the stock market?

Financial economists define enterprise value as: enterprise value is the present value of expected free cash flow discounted by its weighted average capital cost, which is closely related to the financial decision-making of enterprises and reflects the time value, risk and sustainable development ability of enterprise funds. Extending to the field of management, enterprise value can be defined as the ability of enterprises to follow the law of value and make all stakeholders (including shareholders, creditors, managers, ordinary employees, government, etc.). ) Get satisfactory returns through value-centered management. Obviously, the higher the enterprise value, the higher its ability to give returns to stakeholders. And this value can be measured by its economic definition.

Free cash flow can be divided into free cash flow of the whole enterprise and free cash flow of enterprise equity. Total free cash flow refers to the residual cash flow after deducting all operating expenses, investment needs and taxes before paying off debts; Equity free cash flow refers to the residual cash flow after deducting all expenses, taxes, investment needs and debt repayment expenses. Overall free cash flow is used to calculate the overall value of the enterprise, including equity value and debt value; The free cash flow of equity is used to calculate the equity value of an enterprise. The free cash flow of equity can be simply expressed as "profit+depreciation-investment".

According to the definition of enterprise value, enterprise value is positively related to enterprise free cash flow, that is, under the same conditions, the greater the enterprise free cash flow, the greater its value. We define the management aimed at enhancing enterprise value as enterprise value management. Enterprise value index is a widely used performance evaluation index of leading enterprises in various industries in the world, and free cash flow is the most important variable of enterprise value. Because of their objective attributes, enterprise value and free cash flow are replacing traditional evaluation indicators such as profit and income in more and more fields, which has become a subject that modern enterprises must study.

Enterprise value and enterprise market value

Let's discuss the relationship between enterprise value and enterprise market value by taking listed companies whose shares are all in circulation as an example. For this kind of enterprise, the market value of the enterprise is the market value of the enterprise in the stock market.

1. Enterprise value determines the stock value of an enterprise. It is generally believed that the overall value of an enterprise consists of the equity capital value and the debt value of the enterprise. Because the proportion of preferred stock in equity capital is very small, in order to facilitate the study, we can simplify the equity capital value of enterprises into common stock value; For debt, when the interest rate risk and default risk are small, the fluctuation of its market price is also very small. Therefore, we can think that the greater the overall value of the enterprise, the greater the value of its equity capital and the higher the value of its stock under the premise that the capital structure of the enterprise remains unchanged. Therefore, the stock value is determined by the enterprise value.