EV/Free CF
EV/Free CF shows how the value of a whole company, debt included, compares with the free cash its business produces.
How it is calculated
((Stock Price × Shares (Basic, Weighted) (latest quarter)) + (Long Term Debt (Total) (latest quarter) + Current Part of Debt (latest quarter)) − Cash & Short Term Investments (latest quarter)) ÷ (Operating Cash Flow (TTM) + Property, Plant, Equipment Change (Net) (TTM) + Intangible Assets Change (Net) (TTM))
Worked out for every trading day, from the latest reported figures on or before that day.
Quarterly and annual values are the daily value on the first trading day on or after each period end.
- Unit
- Ratio
- Periods
- Daily, Quarterly, Annual
- Source
- Calculated by stockrow from the inputs below
- Made from
- Stock Price, Shares (Basic, Weighted), Long Term Debt (Total), Current Part of Debt, Cash & Short Term Investments, Operating Cash Flow, Property, Plant, Equipment Change (Net), Intangible Assets Change (Net)
- Used in
- EV/FCF vs Own 10-Year Range
Reading EV/Free CF
How to read it
The numerator is enterprise value: market value, from the stock price times the weighted basic share count, plus long-term debt and the current part of debt, minus cash and short-term investments, all from the latest quarter. The denominator is operating cash flow over the trailing twelve months combined with the net changes in property, plant and equipment and in intangible assets over the same span. A lower value means less is paid for each dollar of free cash flow. A rising price or more debt lifts the numerator; stronger operating cash or lighter investment spending lifts the denominator.
What is typical
Capital-light businesses that turn most of their operating cash into free cash often trade at different multiples from capital-heavy ones, whose investment needs eat into it. Values also move with the debt and cash on each balance sheet. Compare with the median for the company’s sector.
Pitfalls
When investment spending exceeds operating cash flow the denominator turns negative and so does the ratio, which does not mean the company is cheap. A single large purchase of plant or intangibles can swing the value. stockrow works it out for every trading day from the latest reported figures on or before that day, so the balance-sheet and cash-flow inputs can be months old while the price is current. Quarterly and annual values are the daily value on the first trading day on or after each period end.