why is cash subtracted from total enterprise value tev 
because it reduces the cost of acquiring the company let s say a company wants to acquire another one that s valued at 100 million if the target company were to have 20 million in cash on its books its real purchase cost would be reduced to 80 million as acquiring it would give access to its 20 million in cash all else being equal a higher cash balance leads to a lower tev and vice versa 