1.5.8 EV to Free Cash
This ratio is the enterprise value (EV) of a company divided by its free cash flow (FCF), which refers to cash flow available to all capital providers (both equity and debt providers) of the company. A high EV/FCF may indicate that a company is overvalued, and vice versa.
where:
is the equity value of company at time
is the total debt of the company, including both long-term and short-term debt on the balance sheet
is the cash flow available for debt service (free cash flow) at time
is the senior debt service at time
is the total cash in the bank at time
is the total cash in the bank at time