The Valuation NodeThe Valuation Node
    Cash Flow Checks

    Cash Flow per Share

    Operating Cash Flow per Share

    Cash flow per share is operating cash flow divided by the number of shares. Set next to EPS, it shows how much of each share's reported profit actually arrived as cash.

    Formula

    Cash Flow per Share

    Cash Flow per Share = Cash Flow from Operations ÷ Number of Shares

    Gap to watch

    EPS − Cash Flow per Share

    Benchmark: Should track EPS closely; a persistent shortfall is the CFO to PAT problem per share

    Reading the number

    EPS is booked profit per share. Cash flow per share is cash received per share. In a company with honest accounting and prompt-paying customers the two move together and the gap is small and random. A gap that is large, or that grows every year, means sales are being recorded that are not being collected.

    It is the same test as the five-year CFO to PAT check, expressed per share so it can be read straight off a stock's summary page and used in the price to cash flow ratio.

    Indian example

    Related ratios

    Earnings Per SharePrice to Cash Flow RatioCFO to PAT Ratio

    Glossary terms

    From the research

    Methodology

    How The Valuation Node Approaches Research

    The research method behind The Valuation Node, how assumptions are stated, how sources are chosen, and how uncertainty is disclosed in every published analysis.

    Valuation

    What Three Years of a Cash Flow Statement Reveals That One Year Hides

    A single year of cash flow is a snapshot. Three years is a story. Learn what the trend reveals about earnings quality, funding, and sustainability.

    Valuation

    Comparing Two Companies on ROE, and Why the Higher One Is Not Always Better

    Two companies can report the same ROE for very different reasons. DuPont analysis shows why an ROE built on leverage is not the same as one built on quality.