What is 'Price to Free Cash Flow'
Price to free cash flow is a valuation metric that compares a company's market price to its level of annual free cash flow. This is similar to the valuation measure of pricetocash flow but uses the stricter measure of free cash flow, which reduces operating cash flow by capital expenditures. This is done as companies need to maintain or expand their asset bases (capital expenditure) to either continue growing or maintain the current levels of free cash flow.
BREAKING DOWN 'Price to Free Cash Flow'
In general, the higher this measure, the more expensive the company is considered. But it is useful also to compare to the company's past levels of pricetofreecash flow along with comparing the average within its industry. For example, if a company generated $200 million in operating cash flow and spent $50 million on capital expenditure, then it generated free cash flow of $150 million. If the company currently has a market cap of $5 billion, the company trades at 33 times free cash flow ($5 billion/$150 million).

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A ratio that illustrates the percentage of free cash flow to ... 
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A measure of how well current liabilities are covered by the ... 
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Free Cash Flow Yield
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What's the difference between free cash flow and operating cash flow?
Learn the difference between free cash flow and operating cash flow. Explore how analysts use earnings and cash flow when ... Read Answer >> 
What is the difference between cash flow and free cash flow?
Learn about the main differences between cash flow and free cash flow. In addition to the differences, learn how to calculate ... Read Answer >> 
What is the formula for calculating free cash flow?
Read about some of the formulas for free cash flow, why investors perform cash flow analysis and what a high or rising cash ... Read Answer >> 
Is free cash flow the same as net free cash flow?
Know the difference between your net cash flow and free cash flow when pitching your company to any of your potential stockholders. Read Answer >> 
Are taxes calculated in operating cash flow?
Learn how taxes are involved with the calculations for operating cash flow, and find out about the importance of operational ... Read Answer >> 
What are some examples of how cash flows can be manipulated or distorted?
Read about some of the most common accounting techniques that can be used to manipulate the operating cash flow on a company's ... Read Answer >>