Free Cash Flow To Sales

AAA

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.

INVESTOPEDIA EXPLAINS '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.

VIDEO

Loading the player...
RELATED TERMS
  1. Free Cash Flow Yield

    An overall return evaluation ratio of a stock, which standardizes ...
  2. Sale

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

    A measure of financial performance calculated as operating cash ...
  4. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  5. Free Cash Flow Per Share

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

    A document filed by an insurance or reinsurance company that ...
Related Articles
  1. Retirement

    The Essentials Of Corporate Cash Flow

    Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
  2. Markets

    Operating Cash Flow: Better Than Net Income?

    Differences between accrual accounting and cash flows show why net income is easier to manipulate.
  3. Markets

    What Is A Cash Flow Statement?

    Learn how the CFS relates to the balance sheet and income statement as a part of a company's financial reports.
  4. Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

    Learn how and why investors are using cash flow-based analysis to make judgments about company performance.
  5. Investing

    Spotting Cash Cows

    We show you why some of these companies stand apart from the herd.
  6. Charts & Patterns

    Why These Could Be 2015's 10 Best Biotech Stocks

    A quick look at a 10 biotech companies that are poised to deliver for shareholders in 2015.
  7. Mutual Funds & ETFs

    How To Build A Bond Ladder?

    Bond laddering is a strategy used when building a portfolio: an investor can spread out interest rate risk and create a stream of cash flows for income.
  8. Economics

    What is M1?

    M1 is a measurement of money supply that includes all hard currency, plus demand deposits such as checking accounts.
  9. Charts & Patterns

    Why These Could Be 2015's 10-Best Media Stocks

    A list of top-tier and speculative media stocks for 2015.
  10. Investing

    Why Is The Nasdaq 5,000 Different This Time?

    The Nasdaq this week has slipped below the 5,000 high-water mark it reached last week. The last time it hit above 5,000 was in March 2000.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center