FIN.1:5 - Archetypal Grounding

A subsidiary owes 70 tomorrow and has 40 usable cash. Its parent has 100. The question “does the group have enough cash?” can be answered yes on aggregate, yet the subsidiary is short 30. FIN.2 must assess an actual permitted transfer, including timing and any restrictions. If a valid transfer of 30 is available before the cutoff, the payment path becomes fundable; an ownership chart alone does not establish it. The result concerns tomorrow’s subsidiary payment, not the group’s enterprise value.

The same distinction matters in a proposed acquisition. In the connected FIN.9 case, buying the equity for 90 and paying integration cost 15 requires 105 before the target’s included cash of 10 becomes transferable. FIN.7’s equity value of 80 already includes that cash. Adding buyer benefits of present value 30 and subtracting integration cost 15 gives a maximum equity price of 95 under those conditions. The actual price of 90 leaves buyer value 5, but the initial funding question still concerns 105. Deducting the target cash from the closing payment would confuse a valuation inclusion with earlier access to money.

If the receiver instead asks which use of its 110 capital is preferable, the positive acquisition result is only one input. FIN.9 compares it with the project and expansion choices on the same buyer, date and feasible baseline. If the acquisition is the only alternative within scope because of an established constraint, retain that constraint; otherwise do not turn “is this acceptable?” into “is this the best available use?” without doing the additional comparison.