Loading the player...

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.

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. Free Cash Flow Per Share

    On a per share basis, free cash flow per share is cash available ...
  2. Sales To Cash Flow Ratio

    A comparison of a company's sales to its cash flow. The sales ...
  3. Cash Flow-to-Debt Ratio

    The cash flow-to-debt ratio is a measure that compares a company’s ...
  4. Non-Operating Cash Flows

    Non-operating cash flows are inflows and outflows of cash that ...
  5. Cash Flow Statement

    One of the quarterly financial reports any publicly traded company ...
  6. Cash Flow From Operating Activities ...

    Cash Flow From Operating Activities (CFO) is an accounting item ...
Related Articles
  1. Investing

    Free Cash Flow Yield: The Best Fundamental Indicator

    Cash in the bank is what every company strives to achieve. Find out how to determine how much a company is generating and keeping.
  2. Investing

    Evaluating A Statement Of Cash Flows

    The metrics for the Statement of Cash Flows is best viewed over time.
  3. Investing

    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.
  4. Investing

    Cash Flow Indicator Ratios

    Learn about the operating cash flow to sales ratio, free cash flow to operating cash flow ratio and free cash flow coverage ratio.
  5. Retirement

    Picking Retirement Stocks: Dividends vs. Free Cash Flow

    Instead of focusing on dividend payments, a better metric for choosing stocks for your retirement portfolio could be a company’s free cash flow (FCF).
  6. Investing

    Cash Flow From Investing

    Cash flow analysis is a critical process for both companies and investors. Find out what you need to know about it.
  7. Investing

    Financial Ratios to Spot Companies Headed for Bankruptcy

    Obtain information about specific financial ratios investors should monitor to get early warnings about companies potentially headed for bankruptcy.
  8. Investing

    Analyzing the Price-to-Cash-Flow Ratio

    Find out how analyzing the price-to-cash-flow ratio can help you make batter investment decisions.
  1. Free & operating cash flows: What's the Difference?

    Learn the difference between free cash flow and operating cash flow. Explore how analysts use earnings and cash flow to evaluate ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. Why do analysts look at operating cash flow?

    Learn how operating cash flow is used to determine financial health. Examine how cash flow is calculated, and what a low ... Read Answer >>
  5. Are taxes calculated in operating cash flow?

    Learn how taxes are involved with the calculations for a firm's operating cash flow, and the overall significance of operational ... Read Answer >>
Hot Definitions
  1. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  2. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  3. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  4. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  5. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  6. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
Trading Center