Cash Per Share

Cash per share generally refers to the cash on the balance sheet divided by the number of shares outstanding.

“Cash” in this context means short-term investments that can be easily turned into cash, rather than long-term investments that are not easily accessible or not mature yet. That is...cash is the stash of 60,000 $100 bills in the couch of the company's CEO; it's the 14,000 shares of AMZN the company got for winning a patent violation suit against Amazon; it's their Wells Fargo savings account with $11 million in it.

Consider a recent toy trend...Fingerlings. They’re little stuffed creatures that have bendy arms and hug your finger. They don’t laugh or anything like Tickle Me Elmo, but whatever...they were huge last Christmas. That trend might have been hard to predict, so the company producing them might have wanted to make sure they had lots of cash on hand before they put money into a risky new product. By making sure they have mostly liquid and cash resources, they bolster their ability to pay their expenses, as well as their investors, should the new product flop.

Happily enough in our story, the Fingerlings did not flop, and households throughout America likely have them scattered throughout the house to this day.

The more contextually relevant parlance of Cash Per Share applies to investors trying to figure out what the $47 a share is actually buying them when the company has only 50 cents a share in earnings. That is, the company is being valued at 94 times earnings on that basis...but upon 30 seconds' scrutiny, an investor would realize that the company has $34 a share in cash and no debt, so at 50 cents a share in earnings, if the cash was subtracted from the share price, the stock is valued at 26 times earnings. 26 x 50 cents is 13 bucks...i.e. where the equity value is being valued at the moment.