EV / CFO

View Financial Glossary Index

Definition

EV / Cash Flow from Operations is the enterprise value of a company divided by its cash flow from operations.

EV/CFO answers the question, "What is a company being valued per each dollar of CFO?", which really answers, "How long will it take the company to pay for itself using all of the operating cash flow?"

EV/CFO tells the amount of time the company would need to pay for itself. For example if the company's ratio is 10, that would mean the company would take 10 years to buy all its outstanding stock and pay all debts using the operating cash flow.

EV/Financial Metrics are often used by analysts to quickly look at a company's valuation multiples. All things being equal, the lower this ratio is, the better.

Other similar metrics include :
EV/EBITDA : How much is each dollar of EBITDA worth to investors?
EV/EBIT : Or each dollar of EBIT?
EV/Revenues: Or each dollar of Revenues?

Formula

EV / CFO = Enterprise Value / Cash Flow from Operations

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