Net debt is the bridge between market-cap and enterprise value, and therefore the reason two companies on the same pe-ratio can be priced very differently on ev-ebitda. A debt-free company with net cash trades at an enterprise value below its market cap.
The subtraction assumes the cash is genuinely available. Cash trapped offshore, cash pledged as collateral or cash needed for daily operations is not really free, and a careful analyst haircuts it.
Example: Northwind Tools has $620M of total debt and $285M of cash and securities, so net debt is $335M. On $195M of EBITDA that is 1.7 times, against 3.2 times gross.
Related: total-debt, market-cap-versus-enterprise-value, net-debt-to-ebitda, cash-and-equivalents, ev-ebitda