why is the price to cash flows ratio used 
the price to cash flow p cf ratio is a stock multiple that measures the value of a stock s price relative to its operating cash flow per share this ratio uses operating cash flow which adds back non cash expenses such as depreciation and amortization to net income p cf is especially useful for valuing stocks with positive cash flow but are not profitable because of large non cash charges the bottom linecash flow refers to money that goes in and out companies with a positive cash flow have more money coming in while a negative cash flow indicates higher spending net cash flow equals the total cash inflows minus the total cash outflows 