BVX Knowledge Base
BVX Knowledge Base
M&A University

% Interest on Cash

Quick Tip:

This input is necessary, but is generally not a significant contributor to value.


Businesses earn interest on cash balances in the bank. BVX calculates interest income on the balance sheet cash line item consisting of Operating Cash, Cash Reserve and Excess Cash. Interest is calculated on the amount of cash balance at the beginning of the year. 


  • Enter % interest rate that the business can earn on the cash balances on the balance sheet.
  • BVX keeps minimum cash on the balance sheet as it is an inefficient use of funds. It keeps just enough cash to maintain , , and Excess Cash. Any excess cash is used to pre-pay outstanding obligations per .
  • Because BVX keeps minimum cash on the balance sheet and because interest rates on cash balances are generally low, the value of the business is not significantly impacted by this cell.