Question

The current price of Sun Valley

Corporation stock is $25 per share.
The company has one million
outstanding shares. On its latest
cash flow statement, the corporation
reported cash flows from operating
activities of $15 million. Calculate the
corporation's price-to-cash flow
ratio.

Answer 1

To calculate the corporation's price-to-cash flow ratio, we need to divide the current price per share by the cash flows from operating activities.

The current price per share is $25, and the cash flows from operating activities are $15 million.

So, the corporation's price-to-cash flow ratio would be:

Price-to-cash flow ratio = Price per share / Cash flows from operating activities

= $25 / $15,000,000

Simplifying this, we get:

Price-to-cash flow ratio = 0.00000167

Therefore, the corporation's price-to-cash flow ratio is 0.00000167.