Price to Cash-flow

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Company  P/CF  Country Industry
Broadcom Limited26.50USATechnology
IT Holdings10.20JapanIndustrials
Micro Focus Internat22.60UKTechnology
Sonda SA24.50ChileTechnology
Obic Business Consul30.10JapanTechnology
B2W Cia Digital-4.60BrazilConsumer Services
Alaska Air Group6.50USAConsumer Services
Constellation Softwa27.90CanadaTechnology
Extra Space Storage31.40USAFinancials
Amot Investments Ltd11.50IsraelFinancials
Alony Hetz Propertie11.10IsraelFinancials
Airport City Ltd11.90IsraelFinancials
Ambev SA12.50BrazilConsumer Goods

Price/cash-flow ratio (P/CF) is a term used in financial analysis. It is a liquidity-oriented equity ratio that reflects the ratio of stock price to cash flow per share. It requires an additional indication of what kind of cash flow (for example, gross cash flow, operating cash flow or free cash flow) is meant. In our case, Cash-flow is calculated by adding depreciations, amortizations and other non-cash items to earnings (net profits) of the year, this is call indirect method.

The P/CF can be used in addition to or in place of price-earnings ratio. The Price to Cash-flow is less susceptible to accounting technical manipulations than price to earnings ratio, because the cash flow is not affected by accounting policy measures such as eliminating of hiding expenses, modifying revenues or depreciations accounting or by alteration of payment periods.

Price to Cash-flow

For companies that determine their profit according to different accounting rules (comparison of companies from different countries), the P/CF can provide a better ratio than P/E.

However, cash-flows are due to investment and ratios suffer considerably stronger fluctuations than those calculated over earnings. It is therefore not appropriate to evaluate the result of a single financial year, but must be considered and averaged over several years.

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