What amount of a firm's cash should be included in the enterprise value?

Question

Quizplus · Accepted Answer

Only the amount of cash needed to run the business should be included in the enterprise value. This is because excess cash is not considered a part of the operating business and may be used for non-core purposes such as investments, acquisitions or dividends. Therefore, only the cash required to fund the day-to-day operations of the business should be included in the enterprise value.

What Amount of a Firm's Cash Should Be Included in the Enterprise