medium · Investment Banking valuation-core

In the 'Enterprise Value' formula, why is Cash subtracted?

1. To align the numerator of the multiple with Net Income on the equity side.
2. To account for the interest income the cash balance generates on the Income Statement each year.
3. Because cash is already fully captured inside the market capitalization figure.
4. It is a non-operating asset that can be used to effectively 'rebate' the purchase price.

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