The Myth:
If the business has debt, it must be worth less.

The Reality:
Enterprise value reflects the total value of the business’s operations — debt and equity combined. Existing debt doesn’t reduce value; it affects how value is divided between lenders and owners.

Why It Matters:
Confusing debt’s impact on equity with business worth can lead to incorrect pricing or flawed lending decisions.

Practical Tip:
Always separate enterprise value (operations) from equity value (what’s left after paying debt).