In practice, analysts may have difficulty accurately assessing enterprise value if they do not have access to market quotations for the company’s debt. When current market quotations are not available, bond values may be estimated from current quotations for bonds with similar maturity, sector, and credit characteristics. Substituting the book value of debt for the market value of debt provides only a rough estimate of the debt’s market value. This is because market interest rates change and investors’ perception of the issuer’s credit risk may have changed since the debt was issued.
