Price-to-Free Cash Flow Ratio (P/FCF Ratio)
The Price-to-Free Cash Flow Ratio (P/FCF Ratio) is a financial metric used to measure the value of a company by comparing its current stock price to its free cash flow. It is calculated by dividing the current stock price by the company’s free cash flow per share. The P/FCF ratio is used to determine the value of a company relative to its free cash flow and can be used to compare companies in the same industry. It is also used to identify potential investments and to assess the potential for future growth.
History of the Term
The Price-to-Free Cash Flow Ratio (P/FCF Ratio) was first developed in the early 1990s by financial analysts as a way to measure the value of a company relative to its free cash flow. It was initially used to compare companies in the same industry, but has since become a widely used metric for assessing the potential for future growth. The P/FCF ratio is often used in conjunction with other financial metrics, such as the price-to-earnings ratio (P/E ratio), to provide a more comprehensive view of a company’s financial health.
Comparison Table
| Company | P/FCF Ratio |
|---|---|
| Company A | 10.5 |
| Company B | 7.2 |
| Company C | 4.9 |
Summary
The Price-to-Free Cash Flow Ratio (P/FCF Ratio) is a financial metric used to measure the value of a company by comparing its current stock price to its free cash flow. It is calculated by dividing the current stock price by the company’s free cash flow per share. The P/FCF ratio is used to determine the value of a company relative to its free cash flow and can be used to compare companies in the same industry. It is also used to identify potential investments and to assess the potential for future growth. For more information about the P/FCF ratio, please visit websites such as Investopedia, Yahoo Finance, and Seeking Alpha.
See Also
- Price-to-Earnings Ratio (P/E Ratio)
- Price-to-Book Ratio (P/B Ratio)
- Price-to-Sales Ratio (P/S Ratio)
- Return on Equity (ROE)
- Return on Investment (ROI)
- Earnings Per Share (EPS)
- Debt-to-Equity Ratio (D/E Ratio)
- Cash Flow Per Share (CFPS)
- Price-to-Cash Flow Ratio (P/CF Ratio)
- Price-to-Sales Ratio (P/S Ratio)
