Equity Valuation

Price-to-Free-Cash-Flow Ratio

Definition

What is Price-to-Free-Cash-Flow Ratio?

Example in practice

A ₦50 billion company generating ₦5 billion free cash flow trades at ten times FCF.

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Net income attributable to ordinary shareholders divided by weighted average ordinary shares.

Earnings per share assuming potentially dilutive securities convert into ordinary shares.

Earnings per share calculated using actual weighted average ordinary shares outstanding.

Cash generated or used by a company's core operations.

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