Price to cash flow ratio
The price to cash flow ratio (PCF) is a measure of the market's expectation of a firm's future health.
The price to cash flow ratio (PCF) is a measure of the market's expectation of a firm's future health. It is calculated by dividing the share price by the cash flow per share.
Like the price to earnings ratio (p/e), the PCF ratio is one that investors look at to calculate the relative cost of a business or a market. It represents the number of years of free cash flow needed to recoup the price of shares.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The benefit of PCF over, say P/E is that it is harder to fudge the numbers, making it an increasingly popular ratio.
-
RICS: Seller confidence hits new high but buyers are yet to return to the property marketThe latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) shows there are signs that confidence is slowly returning to the housing market
-
'Lockdown wills’ at increased risk of legal challengePressures caused by the pandemic led some people to rush their wills. Now, lawyers are saying problems are surfacing that could make them invalid
