Top Stocks 2017. Roth Martin

      Cash flow per share

      The cash flow per share ratio tells – in theory – how much actual cash the company has generated from its operations.

      In fact, the ratio in this book is not exactly a true measure of cash flow. It is simply the company's depreciation and amortisation figures for the year added to the after-tax profit, and then divided by a weighted average of the number of shares. Depreciation and amortisation are expenses that do not actually utilise cash, so can be added back to after-tax profit to give a kind of indication of the company's cash flow.