What is a stock's price-to-cash earnings ratio?

by ena.rippin , in category: Stocks and Equities , a year ago

What is a stock's price-to-cash earnings ratio?

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2 answers


by sibyl , 10 months ago


The price-to-cash earnings ratio, also known as the price-to-cash flow ratio, is a financial metric that compares a stock's market price per share to its cash earnings or cash flow per share. It is calculated by dividing the market price per share by the cash earnings per share (or cash flow per share).

The price-to-cash earnings ratio is used by investors to assess the relative value of a stock. It provides insights into a company's ability to generate cash from its operations and is a measure of the stock's valuation.

A lower price-to-cash earnings ratio indicates that a stock is relatively undervalued compared to its cash earnings, while a higher ratio indicates it is relatively overvalued. The ratio should be analyzed in the context of the company's industry, growth prospects, and other relevant factors to make a better investment decision.

by london_lueilwitz , 10 months ago


A stock's price-to-cash earnings ratio, also known as the price-to-earnings ratio (P/E ratio) or price multiple, is a financial metric used to evaluate a company's valuation. It compares the current market price of a company's stock to its cash earnings per share (EPS).

To calculate the P/E ratio, the market price of a stock is divided by its cash EPS, which is the amount of cash generated by the company for each outstanding share. The ratio helps investors determine how much they are willing to pay for each dollar of cash earnings generated by the company.

A high P/E ratio suggests that investors are willing to pay a premium for the company's cash earnings, indicating positive market sentiment towards future growth prospects. Conversely, a low P/E ratio may indicate that investors have a negative outlook on the company's earnings potential.