Cash flow-to-Debt Ratio What? Indicates how long it would take a company to repay its debt if it devoted all of its cash flow to debt repayment. Formula? Cash Flow-to-Debt = (Total Debt / Cash Flow from Operations) Target? Seek for companies with a Cash Flow-to-Debt lower than 3...
Operating Cash Flow can be calculated using the following formula: OCF = Net Income + Depreciation + Amortization + Change in WC + Any other non-cash item Share Price or Market Cap is price that a share of stock is traded at on the open market. Due to this factor, every valuation metri...
This measurement gives investors, creditors and other stakeholders a broad overview of the company’s operating efficiency. Companies with huge cash flow ratios are often called cash cows, with seemingly endless amounts of cash to do whatever they like. For individuals, a high cash flow ratio is...
Company B – Price-to-Cash Flow Ratio (P/CF) = $3bn ÷ $315m = 9.5x To confirm our calculation is done correctly, we can use the share price approach to check our P/CF ratios. Upon dividing the latest closing share price by the operating cash flow per share, we get 12.5x and ...
Like many ratios used in financial analysis, a company’s cash flow adequacy ratio can also be used to evaluate a company’s liquidity position over time to analyze ongoing trends. Moreover, the ratio is a standardized metric, making comparisons to industry peers (i.e. direct competitors) via...
The second difference is that the price-to-free cash flow ratio uses all of a company’s cash, while the P/CF ratio only uses operating cash flow. Both ratios can be used to measure a company’s value. However, the price-to-cash flow ratio is more commonly used because it’s easier...
Formula for the Price-to-Cash Flow Ratio From the definition, the price-to-cash flow ratio involves two methods of calculation. First, the multiple can be calculated using the company’s market capitalization. In such a case, the price-to-cash flow formula is the following: ...
Get ready to unlock the hidden potential of the cash flow coverage ratio! Now, I know what you might be thinking. Financial ratios? Yawn! But hold on tight, because this is no ordinary tale of numbers and figures. We're about to dive into a world where balance sheets become exhilarating...
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Part of the Series Guide to Financial Ratios What Is the Price-to-Cash Flow (P/CF) Ratio? The price-to-cash flow (P/CF) ratio is a stock valuation indicator or multiple that measures the value of a stock’s price relative to its operating cash flow per share. The ratio uses oper...