The formula to calculate the Price-to-Cash Flow (P/CF) Ratio is:
\[ \text{Price-to-Cash Flow Ratio} = \frac{\text{Price per Share}}{\text{Cash Flow per Share}} \]
The Price-to-Cash Flow (P/CF) Ratio measures a company's market value compared to its cash flow. It indicates how much investors are willing to pay for $1 of cash flow.
Let's assume the following:
To calculate the Cash Flow per Share:
\[ \text{Cash Flow per Share} = \frac{2,000,000}{1,000,000} = 2.00 \]
To calculate the Price-to-Cash Flow (P/CF) Ratio:
\[ \text{Price-to-Cash Flow Ratio} = \frac{50.00}{2.00} = 25 \]
Therefore, the Price-to-Cash Flow (P/CF) Ratio is 25.
