What happens to a company’s Enterprise Value if let’s say $100mm of cash “disappears”???
Someone said it stays the same but he’s explanation was all over the place, so i would appreciate your input.
| +261 | Earliest you can get fired | 56 | 8h |
| +250 | UBS’s M&A BANKERS ARE DOING TERRIBLY. $200M EXTRA IS BEING CUT | 47 | 1h |
| +228 | Investment Banking is Divine | 38 | 12h |
| +223 | Career Crossroads | 31 | 17h |
| +214 | US 2027 SA IB worried about background check | 52 | 23h |
| +206 | Analyst: Why is UBS IB doing worse than peers?, UBS CFO: No Comment | 41 | 10h |
| +203 | Another $115bn Mega deal for these banks. Congrats! | 44 | 36m |
| +110 | Is UBS really that bad? | 32 | 1h |
| +37 | Is Houston SA 28 recruiting already over? | 32 | 12h |
| +23 | Sweat Group 2026 Discussion | 24 | 12h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Dr. Loss $100
Cr. Cash $100
EV stays the same because net debt increases by $100 but equity decreases by $100.
This is literally correct, no idea why the ms. Probably IB analysts freak out if they see a journal entry lol
EV is the value of net core operating assets. And cash is not an operating asset. So a decrease in cash would not decrease EV
If you are wondering how 3 statement flows, IS: no change, CFS: down 100, BS: asset side down 100, equity down 100. So it balances out
This is wrong unfortunately
I like the point about non core operating asset, but ppl are expecting the over simplified cash is subtracted to get to EV
Didn’t ms you. I see what ppl are expecting. But that’s the intuition of enterprise value. Many ppl get tripped up on formulas. So I thought it would make more sense to explain it that way to cross check.
EV remains the same. However, equity value decreases by $100mm.
Could you elaborate on how EV stays the same. If Equity Value is affected, shouldn't EV also be affected?
Dolor et rerum velit dolores repudiandae. Laborum facere dicta ullam repellat quasi dignissimos quia. Nesciunt laborum delectus architecto sed laborum quo et asperiores. Accusamus est incidunt dolores in praesentium voluptates tempora asperiores.
Similique aperiam expedita in provident eum aut quia. Itaque tenetur qui corporis quo nihil suscipit. Repudiandae ut veritatis eos quam et ducimus. Soluta laborum rerum qui ut. Voluptate est sit eligendi sunt tempore laudantium. Placeat nulla sunt ex fuga.
Doloribus nostrum maiores et et blanditiis reiciendis aliquam. Libero officiis aut earum voluptas. Voluptate nostrum rem fugit iure consequatur quaerat. Possimus quo omnis dolores quaerat consectetur odio totam est. Asperiores occaecati voluptates nihil et quae voluptate reiciendis.
Dolor omnis omnis sit voluptate fuga assumenda. Consequatur qui non aut reprehenderit. Cupiditate sint quos tempora ut aut ut recusandae veritatis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...