Define: Cash Flow Per Share

Cash flow per share is a financial metric that measures the amount of cash generated by a company per outstanding share of its common stock. It is calculated by dividing the company’s total cash flow from operations by the number of outstanding shares.

Cash flow per share is important because it provides investors with insights into a company’s ability to generate cash and its overall financial health. It helps investors assess the company’s ability to pay dividends, invest in growth opportunities, and meet its financial obligations.

Cash flow per share and earnings per share are different metrics. Earnings per share represent a company’s net income divided by the number of outstanding shares, while cash flow per share focuses on the cash generated by the company’s operations.

Yes, cash flow per share can be negative if a company’s cash flow from operations is negative. This indicates that the company is generating less cash than it is spending, which may raise concerns about its financial stability.

Investors can use cash flow per share to compare different companies within the same industry and assess their financial performance. It can help investors identify companies with strong cash generation capabilities and potential for future growth.

While cash flow per share is an important metric, it should not be the sole factor in assessing a company’s financial health. Investors should consider other financial ratios, such as debt levels, profitability, and liquidity, to get a comprehensive view of a company’s financial position.

Cash flow per share is typically reported on a quarterly and annual basis in a company’s financial statements. Investors can find this information in the company’s 10-Q and 10-K filings with the Securities and Exchange Commission (SEC).

Cash flow per share generally focuses on cash generated from a company’s core operations. Non-operating cash flows, such as proceeds from asset sales or investments, are typically excluded from the calculation.

While cash flow per share can be used to compare companies within the same industry, it may not be as meaningful when comparing companies from different industries. Different industries have varying capital requirements and cash flow dynamics, making direct comparisons less reliable.