Free Cash Flow To Sales


DEFINITION of 'Free Cash Flow To Sales '

A ratio that illustrates the percentage of free cash flow to the amount of sales. The numerator is found by determining a company's free cash flow, which is available to debt and equity holders. The denominator is the company's annual sales.


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BREAKING DOWN 'Free Cash Flow To Sales '

Free cash flow is a ratio in and of itself and can indicate the "real" amount of cash that a company earns. This is because it is much more difficult to distort free cash flow with accounting gimmicks than it is to manipulate earnings. Therefore, the ratio of free cash flow to sales is a measure of how much of a company's revenue is transformed into cash.

  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  2. Sale

    1) In general, a transaction between two parties where the buyer ...
  3. Free Cash Flow Yield

    An overall return evaluation ratio of a stock, which standardizes ...
  4. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash ...
  5. Free Cash Flow Per Share

    A measure of a company's financial flexibility that is determined ...
  6. Accountant

    A professional who performs accounting functions such as audits ...
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