Price to Cash-flow

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Company  P/CF  Country Industry
Cadence Design Systems23.80USATechnology
1&1 Drillisch30.60GermanyTelecommunications
Elis SA12.10FranceIndustrials
Alnylam Pharmaceuticals-24.60USAHealth Care
Air France-KLM1.20FranceConsumer Services
Eastern Tobacco8.90EgyptConsumer Goods
B&M European Value Retail24.70UKConsumer Services
Rockwool Int B16.30DenmarkIndustrials
Philip Morris CR AS12.10Czeck RepublicConsumer Goods
ZhongAn Online P&C Insur.0.00ChinaFinancials
Landing Intnal. Development-72.60ChinaBasic Materials
YY ADS (N Shares)12.20ChinaTechnology
Genscript B (P Chip)0.00ChinaHealth Care
CIFI Holdings (Group)10.10ChinaFinancials
Engie Energia Chile SA7.40ChileUtilities

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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