easy · Investment Banking implied-share-price
When constructing the bridge from Equity Value to Enterprise Value for a company like Orion Tech, why is cash and cash equivalents subtracted?
- Subtracting cash accounts for the interest income lost upon acquisition
- Cash balances are historically volatile and should be excluded for valuation stability
- Cash is considered a non-operating asset that can be used to offset the acquisition cost
- Cash is a liability that must be settled at the time of a transaction
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