Question

How can I calculate the P/CF (price/ operating cash flow) using the information given to me on any yahoo finance company?

Answer 1

Price to operating cash flows is used to denote the market price with comparison to operating cash flows.

Market price of the company could be taken as the closing price on the day one is trying to value the company

While operating cash flows can be calculated without taking into consideration any kind of non operating income and expenses.

Non operating income of a company includes gains from investment, gain from property or asset sales, exchange rate benefits,or other windfall gains.

While non operating expenses reducing includes all such expenses which includes periodic Debt repayment like Interest charges and currency exchanges.

For calculating the cash flows from operating activities , we should not account for non operating profit or non operating loss.we should only substract operating expenses From the revenue from operations and then arrive at the operating profit.

We should then divide the Market capitalisation by the operating profit of a company to arrive at price to operating profit ratio ( P/CF).