   
|
|
|
|
Price To Cash Flow Ratio
|
The price to cash flow ratio is computed as the Stock Price ÷ (Cash Flow ÷ Outstanding Shares). The cash flow component of the price to cash flow ratio comprises net income as well as noncash charges, most notably depreciation. The outstanding shares component of the price to cash flow ratio represents shares held by investors and excludes shares repurchased and held by the company.
The price to cash flow ratio is a popular method to value stocks. Some analysts consider the price to cash flow ratio superior to the better known price to earnings ratio. The price to cash flow ratio measures how investors value a company's ability to generate the ultimate "hard" asset (namely, cash), rather than an accountant's definition of profit (namely, earnings). The price to cash flow ratio is also often considered a better indicator for comparing valuations across sectors, since the price to cash flow ratio is less susceptible to variations in industry accounting practices. |
|
Is the stock market headed lower? The answer may surprise you.
Find out now with the exclusive & highly regarded charts of Chart of the Day.
|
Popular Terms : deferred revenue, forward PE, 401a, minority interest, deferred tax, retained earnings, trailing PE, average price per share, 144a, FICO score, real GDP, diluted share, wholly-owned subsidiary, net book value, cancelled check, debt service coverage, 1031 exchange, LIBOR, arm's length transaction, option premium, liquidity ratio, commodity, reverse mortgage, EBITDA, inflation, balance sheet, per diem, 1035 exchange, phantom income, Zero Cost Collar, assets under management, margin rate, covered put, required rate of return, Key Rate Duration, APR, current ratio, class C shares, quant, Russell 3000, stock, CUSIP, asset/equity ratio, Black Friday, annualize
|
|
|
|
Rate the price to cash flow ratio definition... |
|
Receive our free Term of the Day email. |
|
|