Excess Cash

Short definition

Excess cash is the balance left after minimum cash, the policy buffer and restricted/trapped cash. Only this slice should be subtracted as cash in net debt and enterprise value.

Detailed explanation

In EV = equity value + net debt, the cash leg should be excess cash; operating cash is part of invested capital. Subtracting all cash understates EV and inflates implied multiples.

Excess cash is a candidate for dividends, debt paydown or buybacks. In a high-rate regime the yield on cash may sit below the cost of debt — or the reverse; the decision is the cash–debt interest gap and the need for flexibility, not WACC alone.

Why it matters for the CFO

EV/EBITDA and net debt/EBITDA move with the excess-cash definition. Treating operating cash as “excess” breaks leverage covenants and valuation.

How it is calculated

Fazla nakit ≈ Kasa − Asgari nakit − Politika tamponu − Kısıtlı / trapped nakit

Variables in the formula

• Excess cash: Unrestricted surplus cash

How to read it

High cash with zero excess (floor + buffer + trapped) means there is nothing to distribute. FX and tax decide which legal entity can actually move the surplus.

Numerical example

Cash 120 mn TL, minimum 45, buffer 20, trapped 25 → excess cash = 120 − 45 − 20 − 25 = 30 mn TL.

Definitions are educational. They are not investment, credit or tax advice.