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Price-to-Cash Flow Ratio
(redirected from Price/cash flow ratio)

   Also found in: Wikipedia 0.01 sec.
Price-to-Cash Flow Ratio
The ratio of a company's stock price to the quantity of its cash inflows, minus its cash outflows over a given time, usually a year. The price-to-cash flow is similar to a company's price-earnings ratio, but it does not take into account earnings that have not actually been received. Some analysts prefer the price-to-cash flow ratio because it allows them to assess risk relative to the company's cash on-hand, instead of the cash it ought to have.


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For example, the appraiser could look at price/cash flow ratios of recently sold businesses, take the median value from several transactions, and then apply this ratio to the cash flow of the business being valued.
Its price/cash flow ratio of 11 is also attractive relative to the industry's 17 and the broader S&P's average of 15.
 
 
 
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