Also called Cash and equivalents, Short-term investments

Cash

Cash, equivalents and short-term investments. Netted against debt to bridge the value of the business to the value of the shares.

Updated 2026-09-03

Cash here means cash, equivalents and short-term investments: money the company holds that could be spent tomorrow. It never enters the projection, because it is not something the business will earn. It enters at the end, in the bridge from enterprise value to equity value.

The reasoning is that a DCF values the operating business. Money already sitting in the account was earned in some previous year and is not part of any future cash flow, so it has to be added back separately or it would simply be lost.

Worked example · AMZN
Cash and equivalents$86.81B
Total debt$65.65B
Net debt−$21.16B

Amazon on 2026-09-05. It holds more cash than debt, so the net figure is negative and it adds $21.16B to what shareholders own.

Cash also lowers the discount rate. Angie weights the capital structure by NET debt, so a cash-rich balance sheet is not treated as leverage, and the equity cost dominates the blend rather than being diluted by borrowings the company could repay tomorrow.

See also

  • Net debt — Positive means a net borrower, negative means net cash. Subtracted from enterprise value to reach what shareholders own.
  • Total debt — Short-term plus long-term borrowings, before any cash is netted off.

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Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

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