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-share stock price by the per-share operating cash flow. In theory, the lower a stock's price/cash flow ratio is, the better value that stock is.
For example, if the stock price for two companies is and one company has a cash flow of (=5) and the other company has a cash flow of (=2.5), then if all else is equal, the company with the higher cash flow (lower ratio, P/CF=2.5) has the better value.
CFPS = (NI + Depreciation + Amortization)/ Common Shares Outstanding