1. What is Cash Flow Per Share?

Cash Flow Per Share (CFPS) is a financial metric that measures the amount of cash flow available to common shareholders per outstanding share. It provides insight into a company's financial health and its ability to generate cash.

2. How Does the Calculator Work?

The calculator uses the CFPS formula:

Where:

• Operating Cash Flow — Cash generated from core business operations (currency)
• Preferred Dividends — Dividends paid to preferred shareholders (currency)
• Shares — Number of common shares outstanding

Explanation: The formula calculates the cash flow available to common shareholders after accounting for preferred dividends, divided by the number of common shares.

3. Importance of CFPS Calculation

Details: CFPS is an important indicator of a company's financial strength and its ability to pay dividends, reinvest in the business, or reduce debt. It's often considered a more reliable measure than earnings per share since cash flow is harder to manipulate.

4. Using the Calculator

Tips: Enter operating cash flow and preferred dividends in currency units, and the number of shares outstanding. All values must be positive, with shares being at least 1.

5. Frequently Asked Questions (FAQ)

Q1: Why is CFPS important for investors?
A: CFPS helps investors assess a company's ability to generate cash and its financial flexibility, which is crucial for dividend payments and future growth.

Q2: How does CFPS differ from EPS?
A: While EPS measures earnings per share, CFPS measures actual cash flow per share. CFPS is often considered more reliable as it's less affected by accounting adjustments.

Q3: What is a good CFPS value?
A: A higher CFPS is generally better, but it should be evaluated in context with industry benchmarks and the company's historical performance.

Q4: Can CFPS be negative?
A: Yes, if operating cash flow is less than preferred dividends, CFPS can be negative, indicating potential financial distress.

Q5: How often should CFPS be calculated?
A: CFPS should be calculated quarterly along with financial statements to track a company's cash flow performance over time.