Definition: What is Price to Cash Flow (P/CF) Ratio?
Price to Cash Flow (P/CF) ratio is the profitability ratio that compares the company’s price to underlying cash flow. This calculation is used to find the worth of the company on the base of cash flow which is generated by the company.
This ratio ignores all the noncash items and describes the underlying cash generated by the business. This ratio compares the business cash flow with its market value to demonstrate if the valuation is justified or not.
If the result of the price to cash flow is low then the firm’s potential is undervaluation.
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