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The price/cash flow ratio (also called price-to-cash flow ratio or P/CF ), is a ratio used to compare a company's market value to its cash flow. It is calculated by dividing the company's market cap by the company's operating cash flow in the most recent fiscal year (or the most recent four fiscal quarters); or, equivalently, divide the per ...
Activity ratios measure how quickly a firm converts non-cash assets to cash assets. Debt ratios measure the firm's ability to repay long-term debt. [4] Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return. [5]
The most theoretically sound stock valuation method, is called "income valuation" or the discounted cash flow (DCF) method. It is widely applied in all areas of finance. Perhaps the most common fundamental methodology is the P/E ratio (Price to Earnings Ratio).
Amazon now sports a price-to-free-cash-flow valuation of 46x. That's down from the 400x valuation the stock had just last year. Moreover, its current valuation by that metric is one of the lowest ...
The chart below illustrates Nvidia's price-to-earnings (P/E) and price-to-free-cash-flow (P/FCF) multiples over the last 12 months. While a P/E of 75.9 and a P/FCF of 82.2 may look pricey, there ...
MELI Revenue (TTM) data by YCharts. The stock's forward P/E ratio is somewhat high at 53, but that is justified by a strong growth rate. It's also much cheaper relative to cash flow, due to non ...
These models rely on mathematics rather than price observation. See ยง Discounted cash flow valuation there. Relative value models determine value based on the observation of market prices of 'comparable' assets, relative to a common variable like earnings, cashflows, book value or sales. This result will often be used to complement / revisit ...
Not all multiples are based on earnings or cash flow drivers. The price-to-book ratio (P/B) is a commonly used benchmark comparing market value to the accounting book value of the firm's assets. The price/sales ratio and EV/sales ratios measure value relative to sales. These multiples must be used with caution as both sales and book values are ...