Price-to-cash flow

You find a company's price-to-cash flow ratio by dividing the market price of its stock by its cash receipts minus its cash payments over a given period of time, such as a year.

Some institutional investors prefer price-to-cash flow over price-to-earnings as a gauge of a company's value.

They believe that by focusing on cash flow, they can better assess the risks that may result from the company's use of leverage, or borrowed money.