Enterprise Value can be incredibly misleading for companies with large financial arms. GM has a large financing arm that provides loans to consumers which is what makes up the vast majority of their total debt. If you EV correctly captured what you wanted, companies should make as many loans as possible.
If Company A borrows $10 from the bank and then loans $10 to Joe, it's got $10 in assets and $10 in liabilities on its balance sheet.
A fair price for Company B to acquire Company A is $0 in cash changing hands. That's the market cap.
But on the books for Company B it will show a cost of $10 to acquire Company A. It had to assume a debt of $10 to gain assets worth $10. To company B, assuming a debt of $10 has no material difference from paying out $10 in cash. So $10 is the true value of the transaction.
> If Company A borrows $10 from the bank and then loans $10 to Joe, it's got $10 in assets and $10 in liabilities on its balance sheet.
Yes, it's equity hasn't changed. However, the debt on its balance sheet has, so the enterprise value formula of EV = market cap + debt - cash now has, because the loan asset won't be counted as cash, but the loan liability will be counted as debt.
That's why no one calculates enterprise value for bank/insurance companies. It doesn't provide any insight or meaning.
The Enterprise Value of GM is $150B. There's <4X difference between the two, not >10X.