Price-to-Cash-Flow Ratio

What Is the Price-to-Cash-Flow Ratio (P/CF)?

The price-to-cash-flow (P/CF) ratio uses cash flow to measure a business’s worth. Investors can use this simple formula to calculate the P/CF ratio:

Price-to-cash-flow ratio = share price/(operating cash flow/outstanding shares)

With this metric, investors can determine whether or not a company’s valuation is fair and how much money their investment is generating. Low P/CF ratios indicate that a business may be undervalued, while the opposite is true for high P/CF ratios.

Related terms

30-Day and 13-Week Operating Cash Burn

30-day and 13-week operating cash burn are also known as the “burn rate.” These are the rates at which a business consumes its cash reserves when it isn’t bringing in profit.

Accounts Payable Days

Accounts Payable Days (AP Days), also referred to as Days Payable Outstanding (DPO), is a financial ratio that measures the average time a company takes to pay its suppliers or vendors for credit purchases.

Accounts Payable Turnover

Accounts payable turnover explains how many times a business pays its creditors in a set timespan. Companies can use this metric to measure their short-term liquidity.

Accounts Receivable Turnover

The accounts receivable turnover ratio (or debtor turnover ratio) allows businesses to evaluate their debt collection efficiency.

Advanced Reporting

Advanced reporting refers to a sophisticated approach to generating and analyzing reports using advanced tools, techniques, and technologies.

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) is a key metric used by subscription-based businesses to track and measure their predictable, recurring revenue streams over a one-year period.