Price/Cash Flow

Price/Cash Flow: compares the market value of a company with its cash and short-term investments. You use this to measure the degree to which liquid assets back up the share price.

Price/Cash ratio = Market-cap/Cash + Short-term investments; or

Price/Cash ratio = Share price/(Cash + Short-term investments)/Issued shares outstanding

This ratio is only relevant for companies that have substantial cash in excess of borrowings. Measuring price to cash over a number of years can demonstrate whether or not the company is generating cash on a regular basis, keeping in mind that major events like acquisitions or divestitures of subsidiaries will disrupt the ratio.