Build a classroom capital bridge: share price, market cap and EV

Give each component its own box and unit

Allow approximately 25 minutes. Draw boxes for shareholders, lenders and cash. A fictional company has 200 shares at a supplied price of SEK 15, debt with market value SEK 1,800 and cash SEK 600. All information concerns the same time and currency. The debt number is explicitly a market value rather than an unchecked accounting balance.

Our simplified model has no preferred shares, non-controlling interests, lease items or other investments. The formula is EV = equity market capitalisation + debt − cash. CFA Institute’s public summary describes a broader enterprise-value concept; these boxes specify what actually belongs in our case. Use this as calculation evidence rather than a complete valuation of a real company.

If the table does not fit, scroll it sideways.

Move a loan card between debt and cash

The first event card says the company borrows another SEK 400 and keeps the full amount in cash. Debt becomes 2,200 and cash 1,000. Equity market value remains unchanged as an explicit model condition. The bridge becomes 3,000 + 2,200 − 1,000 = SEK 4,200, the same as before the event.

The checker should point to both the added debt and the larger cash deduction. Changing debt alone loses the card’s cash inflow. Unchanged EV in this calculation does not mean new borrowing always lacks a market effect. Actual share prices and debt valuations can respond; our card only identifies which supplied values are held fixed.

Use a separate card and check the sign

Return to the opening card. Another scenario uses SEK 300 of cash while share quantity, quote and debt remain fixed. Cash becomes 300 and EV becomes 3,000 + 1,800 − 300 = 4,500. The smaller deduction raises this particular calculated figure. We have not valued anything the expenditure might have purchased.

It is therefore incorrect to call the change a guaranteed profit or a new share quote. Opening EV divided by 200 shares is SEK 21, but the supplied share price remains 15. The quotient allocates a different value concept across the share count. Ask the group to label both numbers so they do not enter the same price field.

Assess the bridge and its stated assumptions

Submit a drawing with the opening value, a loan scenario and a separate spending scenario. For each, checkers should see which inputs changed and which stayed fixed. Assess correct signs, units and an explanation of why SEK 21 is not the quoted price. A standalone total without component boxes makes errors harder to locate.

Connect the work to the company-search guide and enterprise-value lesson. Investiq’s product guide describes a company page with price development; the capital bridge is the class’s manual analysis and requires no EV calculator in the app. The net-debt activity is a next step for groups needing to follow debt and cash through more events.