Price to Free Cash Flow is a way to measure how much a company’s share price is worth compared to its free cash flow. Free cash flow is the cash that a company has left after paying for its operations and investments. It shows how much cash a company can use for other purposes, such as paying dividends, buying back shares, or reducing debt. Price to Free Cash Flow can help investors assess whether a company is overvalued or undervalued based on its cash generation ability. The formula for Price to Free Cash Flow is:
Price to Free Cash Flow = Share Price / Free Cash Flow per Share
Where:
- Share Price (R0117,
pr_last) is the current market price of one share of the company’s stock.
- Free Cash Flow per Share (TM018,
ttm_free_cash_flow) is the free cash flow divided by the number of shares outstanding over the past 12 months.