Price to free cash flow
Market capitalisation divided by free cash flow: how many years of that flow, on unchanged terms, would repay the price of the company.
Formula
P/FCF = \frac{\text{Market capitalisation}}{\text{Free cash flow}}The denominator is taken over a trailing year from the consolidated accounts. With a negative flow the measure is not calculated, because it loses meaning.
How to read the number
Stricter than price to earnings: cash flow is harder to draw with accounting choices.
When the metric lies
The flow swings more than profit because of capital spending and working capital. Over a single year the measure says almost nothing.
Also known as: p/fcf