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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.
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RELATED FAQS

Free & operating cash flows: What's the Difference?
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Is free cash flow the same as net free cash flow?
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What are some ratios I can use the operating cash flow ratio with?
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What is the difference between cash flow and free cash flow?
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What is the formula for calculating free cash flow?
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What are some examples of how cash flows can be manipulated or distorted?
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