What's a good price to cash flow ratio? (2024)

What's a good price to cash flow ratio?

A good price to cash flow ratio is anything below 10. The lower the number, the better the value of the stock. This is because a lower ratio indicates that the company is undervalued with respect to its cash flows.

What is a good price-to-cash-flow ratio?

A good price-to-cash-flow ratio is any number below 10. Lower ratios show that a stock is undervalued when compared to its cash flows, meaning there is a better value in the stock.

What is an acceptable cash flow ratio?

The operating cash flow ratio represents a company's ability to pay its debts with its existing cash flows. It is determined by dividing operating cash flow by current liabilities. A ratio greater than 1.0 indicates that a company is in a strong position to pay its debts without incurring additional liabilities.

What is the justified price-to-cash-flow ratio?

The justified cash flow ratio represents the 'fair' value based on a company's fundamentals. If the current ratio deviates significantly from the justified ratio, it might indicate overvaluation or undervaluation, guiding investors on potential investment decisions.

What is a good FCF ratio?

A “good” free cash flow conversion rate would typically be consistently around or above 100%, as it indicates efficient working capital management. If the FCF conversion rate of a company is in excess of 100%, that implies operational efficiency.

What cash ratio is too high?

Although the creditors prefer a higher cash ratio, the Company does not keep it too high. A cash ratio of more than 1 suggests that the Company has too high cash assets. It is not able to be used for profitable activities.

Is a high cash flow ratio good?

The cash flow to net income ratio compares your operating cash flow to your net income. Because it provides insight into how well you're converting net income into cash flow, a higher ratio is a positive sign.

What is Tesla's FCF ratio?

As of today, Tesla's Enterprise Value is $536,525 Mil. Tesla's Free Cash Flow for the trailing twelve months (TTM) ended in Dec. 2023 was $4,357 Mil. Therefore, Tesla's EV-to-FCF for today is 123.14.

Is 0.2 cash ratio good?

A higher cash ratio indicates more liquidity to handle short-term debt. However, holding excessive cash can be inefficient if it sits idle rather than being reinvested in growth opportunities. Most analysts recommend a cash ratio between 0.2-0.5. A lower number under 0.1 may indicate heightened liquidity risk.

What is the problem with cash ratio?

If you have a low cash ratio, you may have trouble paying your short-term obligations, including your credit card bills, payroll, utilities, taxes, and other expenses. You'll likely have to take on debt or sell off some of your business assets to avoid getting into trouble.

How do you know if cash flow is good?

Stable Cash Flow From Operating Activities (CFO)

Start by keeping track of your cash flow from operating activities over some time. If it's steady over the years, then it's a good sign. Look at the core business if the line's erratic with significant spikes and dips.

What is a healthy cash flow statement?

Generally, a company is considered to be in “good shape” if it consistently brings in more cash than it spends. Cash flow reflects a company's financial health, and its ability to pay its bills and other liabilities. In most cases, the more cash available for business operations, the better.

What is Apple's free cash flow?

106.9B USD. Based on the financial report for Dec 30, 2023, Apple Inc's Free Cash Flow amounts to 106.9B USD.

How much free cash flow does Amazon have?

Amazon free cash flow for the twelve months ending December 31, 2023 was , a year-over-year. Amazon annual free cash flow for 2023 was $36.813B, a 418.2% decline from 2022. Amazon annual free cash flow for 2022 was $-11.569B, a 27.57% increase from 2021.

What is the FCF yield of Apple stock?

Analysis. Apple's unlevered free cash flow yield for fiscal years ending September 2019 to 2023 averaged 4.5%. Apple's operated at median unlevered free cash flow yield of 4.3% from fiscal years ending September 2019 to 2023.

Why is the price to cash flow ratio important?

The P/CF ratio allows analysts and investors to come up with a less distorted picture of a company's financial standing. Although there is no consensus regarding the optimal levels for the P/CF ratio, it is commonly accepted that a low multiple indicates that a stock is undervalued.

What are justified ratios?

The justified P/E ratio is used to find the P/E ratio that an investor should be paying for, based on the companies dividend and retention policy, growth rate, and the investor's required rate of return. Comparing justified P/E to basic P/E is a common stock valuation method.

What if price to cash flow is negative?

Sometimes, negative cash flow means that your business is losing money. Other times, negative cash flow reflects poor timing of income and expenses. You can make a net profit and have negative cash flow. For example, your bills might be due before a customer pays an invoice.

What ratio do you consider to be the most important and why?

Return on equity ratio

This is one of the most important financial ratios for calculating profit, looking at a company's net earnings minus dividends and dividing this figure by shareholders equity. The result tells you about a company's overall profitability, and can also be referred to as return on net worth.

What are the 5 ratios in ratio analysis?

The common financial ratios every business should track are 1) liquidity ratios 2) leverage ratios 3)efficiency ratio 4) profitability ratios and 5) market value ratios.

What is a justified price multiple?

What Is a Justified Price Multiple? Using the approach of forecasted fundamentals or the method of comparables, a justified price multiple calculates the fair value of a price multiple. The value of the multiple if the stock were trading at its fair value is known as the justified price multiple.