What is Price to Cash Flow ratio?

Price to Cash Flow (P/CF) is an investment ratio used for valuing stocks. It compares company's market capitalization to its cash flow, and it is calculated by dividing share price by cash flow per share. Other parameters being equal, lower P/CF means better investing opportunities. This ratio can be understood as how much do investor spend for a single dollar of cash flow.

As this ratio can vary from sector to sector, this ratio should be used for comparison for companies within the same sector.