What is a stock's price-to-operating cash flow per share ratio?

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by bell , in category: Stocks and Equities , a year ago

What is a stock's price-to-operating cash flow per share ratio?

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1 answer

by fred.nader , 10 months ago

@bell 

The price-to-operating cash flow per share ratio is a financial metric used to assess the valuation of a company's stock relative to its operating cash flow. It is calculated by dividing the stock price per share by the operating cash flow per share.


The formula for the price-to-operating cash flow per share ratio is as follows:


Price-to-Operating Cash Flow per Share Ratio = Stock Price per Share / Operating Cash Flow per Share


This ratio helps investors determine how much they are willing to pay for each dollar of a company's operating cash flow. It provides insights into the company's ability to generate cash from its core operations and can be used as a comparison tool across different companies or industries.


A low price-to-operating cash flow per share ratio may indicate that a stock is undervalued, while a high ratio may suggest that the stock is overvalued. However, it is essential to consider other factors and compare the ratio with industry peers or historical trends to gain a comprehensive understanding.