several analysts and investors say it makes sense to use...

several analysts and investors say it makes sense to use enterprise value to come up with a stock multiple. Enterprise value looks at the worth of a company the way an acquirer would -- taking into account a company's cash and debt. The figure is calculated by taking the market cap and then subtracting cash and adding debt. Most software companies don't carry debt, so calculating enterprise value typically involves only subtracting cash.

A Makeover for Cash-Flush Companies A stock's valuation often looks better when cash is subtracted out
Stock	Forward P/E	Enterprise Value/EBITDA
Microsoft	20.73	22.41*
Apple	36.08	49.65
Cisco Systems	19.32	18.3
SanDisk	15.86	4.8
Siebel Systems	35.37	20.11
SupportSoft	32.29	9.95
Symantec	30.74	24.44
Veritas	21.70	14.68
Source: Reuters via Yahoo!Finance *Enterprise Value for Microsoft does not account for the company's special one-time dividend.

In addition, some analysts and investors also reduce the earnings figure in the denominator of a P/E ratio by subtracting out the interest income generated from excess cash.

Proponents of subtracting cash say it offers a better way to value a company's operations. "What you want to do is really separate the operations of the company from the balance sheet of the company," explained Sanford C. Bernstein analyst Charlie Di Bona.

The smart people look at P/E excluding cash. Notice that the above article was done decade or greater ago. Majority of companies in it are worth a lot more than back then showing the power of P/E ex cash in demonstrating growth stocks. Please Mado do yourself a favour and pick up a finance book it will seriously stop you asking these asinine questions.