Price-to-cash flow ratio

The price/cash flow ratio, is a financial ratio used to compare a company's market value to its cash flow. It is calculated by dividing the company's market cap by the company's operating cash flow in the most recent fiscal year ; or, equivalently, divide the per-share stock price by the per-share operating cash flow.
It is commonly used by financial analysts to assess investment value, especially for firms with significant non-cash expenses like depreciation. A lower P/CF suggests a stock may be undervalued, while a higher ratio could indicate overvaluation, though context—such as industry norms or economic conditions—matters in interpretation.
For example, if the stock price for two companies is and one company has a cash flow of and the other company has a cash flow of, then if all else is equal, the company with the higher cash flow has the better value.