Price to cash flow ratio

What is Price to cash flow ratio?

Price to operating cash flow is the ratio of the share price to Operating cash flow. Essentially, Price to operating cash flow measures how much money a company generates relative to its share price.

Formula:

Price to cash flow ratio = Price close * Common shares outstanding / Cash from operating activities

What does Price to cash flow ratio mean?

Price to cash flow is considered to be a more indicative investment measurement metric than Price to earnings per share because cash flows cannot be manipulated as easily as incomes. Some companies seem unprofitable due to large non-cash expenses, even if they have positive cash flows.