Market Cap & Cash
Hey guys, had a quick question about the relationship between market cap and cash on the.
When you value a company and look at P/E multiples, do you guys simply look at market cap/earnings or (market cap - excess cash)/earnings?
In other words, should excess cash (cash not necessary for the day-to-day running of the business) be viewed as separate from market cap? If not, I guess you'd effectively be double-counting if you look at (market cap - excess cash)/earnings?
I've always viewed cash as not being included in market cap, but if you think aboutanalysis, the market of a company is really just the present value of cash flows generated by the business, including the cash currently on the balance sheet.