Sales to Cash Flow Ratio

Posted in Finance, Accounting and Economics Terms, Total Reads: 320
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Definition: Sales to Cash Flow Ratio

Sales to Cash Flow is a measure to calculate the value of business sales done to the amount of cash flow generation. It is calculated by dividing the sales per share by cash flow per share.The time period considered for such a calculation is usually 12 months but can also be done quarterly.


Formula:

Sales to Cash Flow Ratio = Sales per share / cash flow per share


If a company generates R500 of sales and cash flow amount is R250, then sales to cash flow ratio is 2 and company generated twice the cash flow for every unit of sale. The cash flow taken in mainly cash flow from operations as it represents the main cash flow of the company.


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