The Free Cash Flow to Sales, or FCF / S, is a measure of how effectively a company generates surplus Cash Flow from Revenues. It is calculated by dividing the Free Cash Flow by Revenue. This is measured on a TTM basis.
FCF/Sales expressed as a percentage is often used to find 'cash cow' stocks. When screening the market it's good to look for a FCF/Sales ratio that is greater than around 5% - that's often a sign of a high quality company. Firm’s that are able to transform revenue to cash in the bank are, ultimately, able to reinvest the funds into further growth opportunities or return the funds to shareholders.
These are both positive characteristics for investors.
This ratio was covered in depth in Pat Dorsey's Morningstar books.
| Ticker | Name | FCF / Sales | StockRank™ |
|---|---|---|---|
| LON:HE1 | Helium One Global | 1353856.94 | 35 |
| LON:MTE | Montanaro European Smaller Companies Trust | 36653.57 | 0 |
| LON:AFL | Artemis UK Future Leaders | 9501.31 | 0 |
| LON:JZCP | JZ Capital Partners | 8232.90 | 66 |
| LON:JPEL | JPEL Private Equity | 2026.77 | 67 |