Sir I have a doubt in calculating the equity value


1 Answer(s)


#1 - Cash is the cash balance from the current assets in your balance sheet. You are subtracting cash from debt, because you are assuming that the entire cash can be used to pay down the debt.

#2. Net income is not an accurate description of the cash situation of a company. Since net income contains non-cash expenses such as depreciation etc and does not contain cash expenses like Capex.

The FCF contains full capex and hence is a more accurate description of the cash situation of the company.