Price/cash flow ratio

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A measure of the market's expectations of a firm's future financial health. Because this measure deals with cash flow, the effects of depreciation and other non-cash factors are removed. Similar to the price-earnings ratio, this measures provides an indication of relative value.

Calculated by:

Investopedia Says:
Because accounting laws on depreciation vary across jurisdictions, the price-to-cash-flow ratio can allow investors to assess foreign companies from the same industry (ex. mining industry) with a bit more ease.

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The price/cash flow ratio (also called price-to-cash flow ratio or P/CF), is a ratio used to compare a company's market value to its cash flow. It is calculated by dividing the company's market cap by the company's operating cash flow in the most recent fiscal year (or the most recent four fiscal quarters); or, equivalently, divide the per-share stock price by the per-share operating cash flow. In theory, the lower a stock's price/cash flow ratio is, the better value that stock is.

CFPS = (NI + Depreciation + Amortization)/ Common Shares Outstanding

v t e Financial ratios Capitalization rate Debt/equity Dividend cover Dividend payout EV/EBITDA EV/GCI EV/Sales CROCI Price/book Price/cash flow Price/earnings P/E to growth Price/sales Risk adjusted return on capital Return on assets Return on capital employed Return on equity Return on tangible equity Return on capital Short interest Sustainable growth rate Sharpe ratio Treynor ratio

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