Price to Cash-flow

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Company  P/CF  Country Industry
Allied Irish Banks4.00IrelandFinancials
Idorsia AG-6.90SwitzerlandHealth Care
Grasim Industries4.30IndiaIndustrials
Essity Aktiebolag B0.00SwedenConsumer Goods
Ceconomy AG2.20GermanyConsumer Services
Dis-Chem Pharmacies23.70South AfricaConsumer Services
Atacadao SA11.10BrazilConsumer Services
NK Russneft PAO8.70RussiaOil and Gas
Brighthouse Financial1.50USAFinancials
Becle S.A.B. de C.V.36.50MexicoConsumer Goods
Play Communications0.00PolandTelecommunications
Celltrion Healthcare0.00KoreaHealth Care
CSC Financial (H)1.90ChinaFinancials
BTG Pactual Participations0.00BrazilFinancials
Health and Happiness International Holding11.20ChinaConsumer 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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