Enterprise value to free cash flow (EV/FCF)
What a buyer of the whole company pays for one unit of the cash left after capital spending.
It is the whole-company version of the ratio a private owner would actually use to price a business.
How it is computed here
(Market capitalisation + total debt - cash) / free cash flow
Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business. Filed under value. Neither a high nor a low reading is good on its own, so it is never coloured as one.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Negative or lumpy free cash flow makes the ratio unusable in individual years.
- A company under-investing in itself will look cheap here for exactly as long as the under-investment lasts.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is enterprise value to free cash flow calculated?
(Market capitalisation + total debt - cash) / free cash flow. Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business.
What does enterprise value to free cash flow tell a value investor?
It is the whole-company version of the ratio a private owner would actually use to price a business.
When does enterprise value to free cash flow mislead?
Negative or lumpy free cash flow makes the ratio unusable in individual years. A company under-investing in itself will look cheap here for exactly as long as the under-investment lasts.