What is a P/CF ratio (Price-to-Cashflow)?
A P/CF ratio is calculated by dividing a company's market capitalisation (the value of all its shares combined) by its cash flow from operations (the amount of cash generated by a company’s typical business operations). It is sometimes considered an alternative to the P/E ratio because cash flows are not impacted as significantly as earnings by accounting methods such as depreciation. A lower P/CF ratio could indicate that a stock is undervalued and a high ratio that it is overvalued.
P/CF = Value of all shares / Operating cashflow
Please note that financial analyses and ratios should not be looked at in isolation when making investing decisions.
Introduction to stock trading
- What is a stock?
- Where do stocks come from?
- What is stock ownership?
- Why do people buy stocks?
- How could you lose money from buying stocks?
- What are stock markets?
- What is a stock broker?
- What is a stock price?
- What is a bid-offer spread?
- What are stock charts?
- What is commission?
- What are bullish vs bearish markets?
- What is technical analysis?
- What is fundamental analysis?
- What are analyst recommendations?
- What are stock financials?
- What is EPS (earnings per share)?
- What is a P/E ratio (Price-to-Earnings)?
- What is a P/CF ratio (Price-to-Cashflow)?
- What is ROE (Return on Equity)?
- What is Market Sentiment?
- What are Market Sentiment Indicators?
- What is the VIX?
- How does News and Social Media impact stocks?