Enterprise & Equity Value
Why do we subtract cash in the EV bridge - and is ALL cash really non-operating?
Model answer
We subtract cash because it's treated as a non-operating asset that offsets debt (and a buyer keeps it). The gotcha: not all cash is truly excess - companies need some minimum operating cash to run…
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More from Enterprise & Equity Value
- What's the difference between enterprise value and equity value?
- Why do you subtract cash when going from equity value to enterprise value?
- Why is enterprise value capital-structure neutral but equity value is not?
- A company issues $100 of new debt and holds the cash on its balance sheet. What happens to EV and equity value?
- Which valuation multiples pair with enterprise value vs. equity value, and why?
- How do you calculate fully diluted shares?
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