Price to Cash Flow Ratio

A measure of the market’s expectations of a firm’s future financial health. Because this measure deals with cash flow, the effects of depreciation and other non-cash factors are removed. Similar to the price-earnings ratio, this measures provides an indication of relative value.

Calculated by:

Because accounting laws on depreciation vary across jurisdictions, the price-to-cash-flow ratio can allow investors to assess foreign companies from the same industry (ex. mining industry) with a bit more ease.

Price-To-Cash-Flow Ratio