People often confuse enterprise value (EV) with the total enterprise value (TEV). However, the two are different. In-fact, EV is a subset of TEV. EV represents the value of the core-operations of the business; TEV represents the value of both core operations (enterprise value) and non-core operations (Non-Operating or surplus assets) of the business.
Value of Operating Assets (EV)
+ Value of Non-Operating Assets
= Total Value of the Firm/Company (TEV)
Non Operating Assets (Surplus Assets) do not reflect its value in the operating earnings of the company. Therefore such assets should be separately valued. Value of such surplus assets is added to the EV derived through different valuation methodologies to arrive at the total enterprise value or firm value. Non-operating assets represent the assets that are not adding any value to the operations of business like non-operating cash, marketable securities, investments, assets held for sale etc.
TEV = Common Equity + Preferred Equity + Minority Interest + Debt
Non Operating Assets = Investments + Assets Held for Sale + Non-Operating Cash