Excess Cash, Total Cash, and Enterprise Value - Interview question

g2010's picture
Rank: Chimp | 5

Hey Everybody, I apologize if this is in the wrong forum, but doing interview prep and ran across this question for calculating EV that I don't get. Super lost, and sorry if this is a stupid question...I got a lot to learn. I am given the share count ($10), # of shares (200M), net debt (300m), total cash (80M), accumulated depreciation (125M), and excess cash (30M). I am confused about the relationship between excess cash and total cash and how that should be calculated to get EV. Does total cash include excess cash?
Currently I have:
EV = 200*10 (mkt cap) + 300M (debt) -??
I believe I ignore depreciation, but not sure if I should subtract total cash (80M), or total cash - excess cash (50M).

Any help would be appreciated.

Comments (3)

Mar 18, 2020

If the debt figure is NET debt --> ask how the 80 and the 30 are reflected in it. What they probably want you to say is: 50 (80-30) of the 80 is appearently trapped cash and cannot be distributed. Therefore net debt is not 300 but 350.

Rest of calc is ok.

Mar 19, 2020

Will give this a spin. assuming that you made an error and share count = share price

  • Share price - $10
  • # of shares - 200m
  • Net Debt - 300m
  • Total Cash - 80m
  • Accum Depre - 125m
  • Excess cash - 30m
    means cash tied up in biz is 50m (80m - 30m)

EV = Market Value of Equity + MV of Debt - Cash

Do note that trapped cash and cash tied up in working capital are not to be considered here.

EV = 200m (# of shares) * 10 (Market Price) + 300m (debt) - Cash (30m)

EV = 2270m

Please feel free to point out any mistakes.


Mar 22, 2020
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