Price-to-cash flow

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.

Price-to-cash flow.

You find a company's price-to-cash flow ratio by dividing the market price of its stock by its cash receipts minus its cash payments over a given period of time, such as a year.

Some institutional investors prefer price-to-cash flow over price-to-earnings as a gauge of a company's value.

They believe that by focusing on cash flow, they can better assess the risks that may result from the company's use of leverage, or borrowed money.

References in periodicals archive ?
released today, indicates that leading firms posted superior results across a number of financial metrics including price-to-earnings ratio, price-to-cash flow, and operating per share, as well as in aggregate share price movement.
AN INVESTOR WHO IS WILLING TO follow the value school of investing should consider eight factors in selecting securities (or mutual funds), including price-to-earnings ratio, price-to-cash flow ratio, price-to-book value ratio, dividend yield, private market value, adjusted net working capital, insider buying and stock repurchases.
CHICAGO -- Kevin Matras shows how to search for stocks with increasing Cash Flows, but low Price-to-Cash Flow ratios.
However, the Price-to-Cash Flow, or P/CF, is another great ratio to do just that.
Likewise, SCG trades at a moderate discount to its industry peers based on price-to-cash flow multiples yet at relative parity with respect to multiples of sales and book value.