A Price to Cash Flow Ratio (PCFR or P/CF Ratio) is use by investors to evaluate the attractiveness of an investment against the stock of a company by comparing the stock price of a company with the cash flow of the company. In other words, Price to Cash Flow Ratio indicates the amount of money payable by investors to the cash flow generate by the company.
Price ratio against the cash flow is commonly use by investors to describe valuations a company associate with one of the most important considerations in the financial statements of the company namely cash. It can be said that the ratio of Price to Cash Flow Ratio or PCFR is only considering his judgement in cash flow and eliminate the factors and non-cash depreciation (depreciation).
Here is how to calculate the Price to Cash Flow Ratio (PCFR) along with the formula and example case.
Price to Cash Flow Ratio or price ratio against the cash flow can be calculate by dividing the STOCK PRICE (Price per Share) and CASH FLOW per share (Cash Flow per Share). Equation or formula of Price to Cash Flow Ratio can be written as follows:
Price to Cash Flow Ratio = stock price/cash flow per share
Price to Cash Flow Ratio can also be calculate using market capitalization. The formula or equation can be written as below:
Price to Cash Flow Ratio = market capitalization/cash flow
Description: cash flow per share can be calculate by adding depreciation and amortization (depreciation) to the net profit is then divide by the number of outstanding shares. Cash flows can be found in the financial report of Annual cash flow.
Cash flow per share = (net income + Depreciation + Amortization)/total number of outstanding shares
On 05 April 2018, price per shares of ABC organization is $ 3,680. While cash flow per sheet stocks or Cash Flow per Share the company publisher this is USD 490. What is the ratio of the price against the cash flow or Price to Cash Flow Ratio of ABC organization?
Note:
Stock price = IDR 3,680,-
cash flow per Shares = $. 490,-
Price to Cash Flow Ratio =?
Solution:
(1) Price to Cash Flow Ratio = stock price/cash flow per share
(2) Price to Cash Flow Ratio = us $3,680,-/USD 490,-
(3) Price to Cash Flow Ratio = 7.51 times
So the Price to Cash Flow ratio or price ratio against the cash flow is of 7.51 times.
The Price to Cash Ratio (P/CF Ratio) is a Ratio use to appealing company with a market value of a cash flow or current of cash. P/CF ratio is high indicating the market value of the company or the shares of a company are trade with a relatively high price and the possibility of not generating enough cash flow. In General, investors will prefer the ratio P/CF Ratio due to low P/CF low indicates the concern companies have large cash flows.
Price ratio against the cash flow is commonly use by investors to describe valuations a company associate with one of the most important considerations in the financial statements of the company namely cash. It can be said that the ratio of Price to Cash Flow Ratio or PCFR is only considering his judgement in cash flow and eliminate the factors and non-cash depreciation (depreciation).
How to calculate the Price to Cash Flow Ratio (Price Against cash flow)?
Here is how to calculate the Price to Cash Flow Ratio (PCFR) along with the formula and example case.
The formula of Price to Cash Flow Ratio
Price to Cash Flow Ratio or price ratio against the cash flow can be calculate by dividing the STOCK PRICE (Price per Share) and CASH FLOW per share (Cash Flow per Share). Equation or formula of Price to Cash Flow Ratio can be written as follows:
Price to Cash Flow Ratio = stock price/cash flow per share
Price to Cash Flow Ratio can also be calculate using market capitalization. The formula or equation can be written as below:
Price to Cash Flow Ratio = market capitalization/cash flow
Description: cash flow per share can be calculate by adding depreciation and amortization (depreciation) to the net profit is then divide by the number of outstanding shares. Cash flows can be found in the financial report of Annual cash flow.
Cash flow per share = (net income + Depreciation + Amortization)/total number of outstanding shares
Example of calculation of Price to Cash Flow Ratio (the ratio of the price against the cash flow)
On 05 April 2018, price per shares of ABC organization is $ 3,680. While cash flow per sheet stocks or Cash Flow per Share the company publisher this is USD 490. What is the ratio of the price against the cash flow or Price to Cash Flow Ratio of ABC organization?
Note:
Stock price = IDR 3,680,-
cash flow per Shares = $. 490,-
Price to Cash Flow Ratio =?
Solution:
(1) Price to Cash Flow Ratio = stock price/cash flow per share
(2) Price to Cash Flow Ratio = us $3,680,-/USD 490,-
(3) Price to Cash Flow Ratio = 7.51 times
So the Price to Cash Flow ratio or price ratio against the cash flow is of 7.51 times.
Analysis and assessment of the Price to Cash Ratio (the ratio of the price against the cash flow)
The Price to Cash Ratio (P/CF Ratio) is a Ratio use to appealing company with a market value of a cash flow or current of cash. P/CF ratio is high indicating the market value of the company or the shares of a company are trade with a relatively high price and the possibility of not generating enough cash flow. In General, investors will prefer the ratio P/CF Ratio due to low P/CF low indicates the concern companies have large cash flows.
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