Valuation Terms
Price to Free Cash Flow
A ratio comparing market value to free cash flow.
Also called: P/FCF, price to FCF
What it means
This ratio compares a company’s market value to the free cash flow it generates. Some investors prefer it because cash generation can be harder to manipulate than some earnings measures, though free cash flow can still swing based on business conditions and spending choices.
Why it matters
It helps users judge how expensive the stock looks relative to cash left after core reinvestment needs.