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Price to Cash Flow

The price-to-cash flow (P/CF) ratio is a multiple that compares a company’s market value to its operating cash flow or its stock price per share to operating cash flow per share.

The P/CF multiple works well for companies that have large non-cash expenses such as depreciation.

A low P/CF multiple may imply that a stock is undervalued in the market.

Some analysts prefer P/CF over price-to-earnings (P/E) since earnings can be more easily manipulated than cash flows.