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Price to Free Cash Flow Meaning | Stockopedia

The price/free cash flow ratio, or p/fcf ratio, values ​​a company against its free cash flow. is the company’s stock price divided by its free cash flow per share. this is measured on a ttm basis and uses diluted outstanding shares.

stockopedia explains p/fcf

This ratio is similar to the price-to-earnings ratio, but the purely “paper only” expenses are omitted. Some companies report big profits, but they can’t turn those profits into cash! A company cannot survive without cash, and if it cannot generate it internally, it will have to turn to outside investors for backing, resulting in stock dilution or increased indebtedness.

Reading: P/fcf ratio

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Free cash flow is the remaining amount a business can use to pay down debt, distribute dividends, or reinvest to grow the business. is operating cash flow minus capital expenditures. a more detailed definition would be:

(earnings before interest and taxes * (1 tax rate) + depreciation and amortization – change in net working capital – capital expenditures).

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In general, the higher this measure, the more expensive the company will be. There are several advantages that the P/FCF has over other investment multiples, most notably the fact that, in contrast to earnings, sales, or even book value, companies have a harder time manipulating cash flow.

This is measured on a ttm basis and uses diluted shares outstanding.

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the 5 lowest p/fcf stocks in the market

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