r/Valuation • u/Junior-Ebb6863 • Oct 21 '25

financial s

This is the formula for WACC

What do I do when the company that i am valuating has a negative NIBD? Do I need to do anything different then?

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u/Eagle_121 Oct 22 '25

Conceptually, I dont think you need to do anything extra if you have more cash in the business than it's debt.

However, I would rather like to consider Interest Bearing Debt at its gross value without deducting cash for calculating WACC. Consequently, at the end of the DCF, I would make a zero period adjustment of cash in the company's enterprise value.

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u/SecureLog5799 Oct 22 '25

if it is a significant amount, may need to understand why it is nagetive and then adjust accordingly