Series 79 practice questionmediumEnterprise Value vs Equity Value
Which item is added when bridging from enterprise value to common equity value?
- ADebt
- BPreferred equity
- CMinority interest
- DCash and cash equivalents✓ Correct answer
Explanation
Why D — Cash and cash equivalents
To bridge from enterprise value to common equity value, subtract debt and other non-common claims such as preferred equity and noncontrolling interest, then add cash and other non-operating assets. Therefore, cash is added.
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