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Thursday, August 18, 2011

How to Calculate Price to Cash Flow Ratio

Price to Cash Flow Ratio (P/CF) is a financial ratio used to compare the share price with cash flow per share. The lower the ratio, the more likely that the stock may be undervalued. P/CF is more stable than Price-Earnings Ratio (P/E), since cash flow is usually less volatile than earnings. It can be calculated as follows:

P/CF = Market price per share / Cash flow per share
Note: Cash


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