how to include cash and marketable securities in valuation?
Damodaran suggest to add this on top of DCF from operational assets. He terms this for firm value - however, if firm value = enterprise value, the enterprise value formula excludes cash, not include. I am abit confused here in terms of the relationship between firm value, enterprise value and DCF equity value

Question

how to include cash and marketable securities in valuation? 
Damodaran suggest to add this on top of DCF from operational assets. He terms this for firm value - however, if firm value = enterprise value, the enterprise value formula excludes cash, not include. I am abit confused here in terms of the relationship between firm value, enterprise value and DCF equity value

anonymous · Answer

The value you get when you use DCF valuation is entreprise value meaning the value of the operating assets or the value of fixed assets + the value of working capital or the value of Equity + the value of net debt (debt - cash). If you want to get the value of the firm, you will have to add cash to the entreprsie value because as you know with DCF valuation we just capture the income from the operating assets and cash not being an operating asset, the income from cash is not reflected on that so cash must come in excess of the entreprise value to get the firm value. It would be different in the case of the direct method of FCFE in which you start with net income which already includes income from cash.

anonymous · Answer

Thanks for answer: My understanding is (FCFF): Given that cash and marketable secutires  is pulled out, then the Value of equity = DCFF (from operating assets)+DC Terminal value+Cash&marketable securities-Debt.  

Is the value of equity the same as total value?