Sales To Cash Flow Ratio

It's all about how cash-profitable your company is. And this is kind of a weird ratio, because in most metrics that measure profitability, cash flow (or EBITDA) goes in the numerator (top bunk position). But in this case, sales goes there. Odd.

So if a company had $300 million in sales and those sales produced $60 million in cash flow, then the sales to cash flow ratio would be 5x. Or 5.0. Or 5:1. Or 500%. So it's kind of strange; in more common parlance, you'd use "cash flow margin" as the metric here...and in this case it'd be 60 over 300, or 20%, as in our cash flow margins were 20%.

But it's not. This is the inverse. So just know it and move on.