If I make 50K/year and have no assets, is my net worth the same as someone who makes 50K/year and has $10 million in savings (with no debt)?
At $458, Apple's PE is 10.42. Subtract cash from the price portion of that equation, and the PE becomes 6.68. I would think cash should be a perfectly legitimate consideration. What if Apple had $431B in cash instead of $131B? Would it still be appropriate for Apple to be valued at $431B like it is now? If not, then at what point does cash begin to matter?
PE means Price/Earning Ratio. It doesn't mean Price/Earning exclude cash. The cash are results of past earnings which have already be used to calculate past PE. If you subtract cash from price you are effectively adding past earnings into current earnings to calculate current PE which is invalid.
Look at it from a different way, if Apple uses all that cash to buy an island somewhere, using your method, the PE will suddenly go way up but the truth value of Apple didn't change at all.
So PE should just be PE. Otherwise you will be comparing apple with orange.