------------------------------------------------------------------------
Series : Ratio Analysis (21 th Post)
-----------------------------------------
Is the
company generating enough cash from its sales ?
This ratio
helps us to understand the Cash being generated from sales or its ability to generate
cash from its sales, usually expressed as a percentage.
The company’s
sales growth should be in parallel with the Cash flow of the company if it’s
not then there is change in terms of sale and Inefficient or
ineffective management.
A high
number means the firm will be able to grow because it has sufficient cash flow
to finance additional production, a low number indicates the opposite.
The
statement of cash flows has three distinct sections, each of which relates to
an aspect of a company's cash flow activities - operations, investing and
financing. In this ratio, we use the figure for operating cash flow
Formula: Operating
cash flow / Sales Ratio = Operating Cash Flows / Sales Revenue
Next Post on Ratio Analysis: Cash
Flow Indicator Ratios: Free Cash Flow/Operating Cash Flow Ratio
--------------------------------------------------------------------------------------------------------
In my quest for learning value investing I came across this interesting
article and thought would like to share this with the community
Comments / Improvements and
points worth considering are welcome
Google Feed burner is free & allows to
directly deliver any new post on this blog to your email .If you are
interested kindly enter your Email in the “Subscribe Via
Email” on the top left hand side of the navigation menu’s.
Related Articles
The given information is very relevant to all the investors and they can use it in trading.
ReplyDeleteThis is really an amazing one as lot of tips to pic. Great informations. Thanks for sharing.
ReplyDeleteStocks in News
Rossari Biotech IPO