Price to Cash-flow

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Company  P/CF  Country Industry
Ubisoft Entertainment10.00FranceConsumer Goods
Puma35.20GermanyConsumer Goods
Frasers Centrepoint5.60SingaporeFinancials
TMK OAO4.70RussiaBasic Materials
Vipshop Holdings12.10ChinaConsumer Services
MercadoLibre Inc.69.80USAConsumer Services
L&T Finance Holdings-6.20IndiaFinancials
Novorossiysk Commercial Sea Port4.40RussiaIndustrials
TAL Education Group48.00ChinaConsumer Services
Europlan PAO5.60RussiaConsumer Services
Kruk S.A.-8.00PolandIndustrials
Kernel Holding10.40PolandConsumer Goods
CD Projekt SA43.10PolandConsumer 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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