Price to Free Cash Flow

Price to Free Cash Flow

Analysts used the price-to-free cash flow ratio to compare company valuations. It is the ratio of a company’s share price to its free cash flow and can be calculated by dividing a company market capitalisation (share price x number of shares outstanding) by its free cash flow. Companies sporting low price-to-FCF ratios relative to peers may infer they are comparatively undervalued.

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