Enterprise value and Cash?
When calculating enterprise value you subtract cash but when calculating equity value you include the amount of the cash. Why does it seem to be excluded from the total firm value but included if you are valuing the stock??
If i was the seller, why would i subtract the value of my extra cash when determining my total company value? I wouldn’t just let you have it…wouldn’t i want the value of that cash included in the purchase price??
Study together. Pass together.
Join the world's largest online community of CFA, CAIA and FRM candidates.