Sales to Cash Flow Ratio

The sales to cash flow ratio measures the level of a company's sales against its total cash flow.

Expressed on a per-share basis, the sales to cash flow ratio is calculated by dividing a company's sales volume per share in a given period by its per-share cash flow.

Higher ratios are preferable as they indicate increasing levels of financial strength.

For instance, if a company generates $1,000 in sales per share in a given period accompanied by a per-share cash flow of $250, its sales to cash flow ratio would be 4 ($1000 in sales / $250 cash flow = 4).

Unlike many metrics used for measuring financial strength, the sales to cash flow ratio accounts for the company's output (sales) as the principle mechanism for inbound cash flow.