Operating Cash Flow per Share Ratio

Operating Cash Flow per Share (CFPS) is a more informative indicator than earnings per share. That is why it is widely used by investors to assess the investment attractiveness.

Alternative names of Operating Cash Flow per Share:

  • CFPS
  • Operating Cash Flow per Share.

What Does Operating Cash Flow per Share Show?

CFPS or Operating Cash Flow per Share is calculated dividing the operating cash flow by the number of shares in circulation. The indicator is more informative than the ratio of price to income per share. It is difficult to manipulate monetary indicators, so CFPS provides a more realistic estimation. Free cash flow can be considered instead of an operating cash flow during the process of evaluation.

Formula of Operating Cash Flow per Share

CFPS = (Operating cash flow – Dividends on preferred shares) / Number of shares in circulation

Normative Value of Operating Cash Flow per Share

Underperforming companies in which the shares are relatively cheap in relation to the free cash flow, have a small P/CF ratio and are more attractive for the investors.