Price to Cash-flow

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Company  P/CF  Country Industry
GDS Holdings ADS (N0.00ChinaConsumer Goods
Sumitomo Bakelite8.70JapanBasic Materials
Gn Store Nordic20.00DenmarkHealth Care
Yaoko Co Ltd12.90JapanConsumer Services
GMO Internet33.80JapanTechnology
Garrett Motion3.20USAConsumer Goods
Fuyo General Lease-1.90JapanFinancials
Fancl Corp30.10JapanConsumer Goods
Evolution Mining7.10AustraliaBasic Materials
Enel Chile5.90ChileUtilities
Subsea 713.30NorwayOil and Gas
Elekta B18.40SwedenHealth Care
Rocket Internet SE-26.40GermanyFinancials
Egypt Kuwait Holding5.40EgyptFinancials

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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