Clarify what is already inside the valuation
EV is used under different analytical conventions. Start with the definition, not the label: which operating assets and flows are valued, whether investment assets are included and how leases are treated. If cash flow already contains income from a separate equity holding, adding the holding’s full value may double count it.
For a consolidated group, perimeter is especially important. Under IFRS 10, consolidation is based on control, not necessarily ownership of every subsidiary share.[100](#source-cv-ifrs10) A subsidiary’s fully included operating results may partly belong to other owners. Group value is then not the value of the parent shareholders’ interest.
A bridge with fictional figures
Suppose the group’s operating-asset value is 500 million roubles. It also has 40 million of free non-operating cash and an investment package worth 20 million that is not included in the forecast. Financial debt is valued at 150 million and non-controlling interests in subsidiaries at 30 million. There are no other adjustments in the example.
Conditional parent equity value is 500 + 40 + 20 − 150 − 30, or 380 million. With ten million identical shares, the value is 38 roubles per share. If non-controlling interests are forgotten, the result is 41 roubles: the error is not in the business forecast but in allocating rights to it.
Non-controlling interests here are valued in money. Substituting a balance-sheet line without explaining the method is not an exact market calculation. Debt is similar: carrying amount, repayment amount and market value may differ. The selected basis must fit the question and be disclosed.
Why not subtract all cash from debt
Part of the balance is needed for daily payments, may be pledged or may be unavailable for distribution. If the operating forecast assumes a minimum cash reserve, adding that reserve at the same time as a free asset violates the assumptions. Cash availability is checked through disclosures and restrictions, not merely the balance-sheet line name.
Suppose 10 of the 40 included millions are actually required for operations and not separately released. Under that refined assumption, available cash falls to 30 million and equity value to 370 million. This illustrates a change in assumption, not a universal discount to every cash balance.
Control reconciliation before dividing by shares
Check lease obligations, pension and contingent claims: not every obligation is automatically financial debt, but material rights cannot simply be omitted. Determine whether the corresponding payment is already in operating cash flows. A future expense and a separate deduction of the same obligation must not reduce value twice.
Finally, check share classes, options and potential dilution. Dividing by a convenient round number of securities does not repair an incomplete bridge. A useful output is a table from operating value to the rights of a specific owner group with the basis for every adjustment. It is not the price of a contemplated transaction and does not guarantee that shares can be bought or sold at the calculated value.
Do not lose the other side of consolidation
If the operating forecast includes the entire subsidiary, separate the value of claims held by outside owners. If the forecast initially includes only the parent’s share of the flow, subtracting the same interest again creates a different error. The sign depends on the initial perimeter, not on a habit of placing an adjustment in a particular row.
Treat joint ventures and investment packages similarly. Their income may appear in reported profit without their revenue being included in the operating forecast. Perform a separate reconciliation rather than assuming all subsidiaries and associates are treated alike.
Before dividing by shares, perform a reverse check: add the calculated owners’ equity to the separated claims and remove assets added separately. The original operating value should be restored. Arithmetic agreement does not prove valuation correctness, but helps detect a missed sign or double adjustment.
**Related foundations:** [Market capitalisation and multiples: compare like with like](/guides/market-cap-and-multiples/); [Balance sheet: what an organisation owns and owes](/guides/balance-sheet/).