What Are Cash Earnings Per Share?

Cash flow per share is the net cash flow generated by the company's operating activities minus the ratio of preferred stock dividends to the number of common shares outstanding.

Cash flow per share

Per share

Article 11 of China's "Regulations on Financial Accounting Reports" states:

Article 11 of China's "Regulations on the Company's Financial Accounting Reports" states: "

How are "operating cash flow per share" and "cash flow per share" defined? What are these two parameters for when judging a company?

The latter is the abbreviation of the former, which is the same thing. The formula is the operating cash flow balance / total equity. This indicator company will provide in the financial report and generally appears in the "financial and operating data summary" section at the beginning of the report. Why the cash flow per share is not calculated by the balance of the three cash flows of operation, investment and financing, but only the operating cash flow, because this indicator is used to verify the quality of the earnings per share (EPS) over the same period. Shanghai is still a profit indicator.

If the EPS is much higher than the cash flow per share, it means that the profit generated by the company's current sales is mostly book profits, and it does not bring real cash to the company in the current period, that is, the quality of the profit or EPS is poor, which is more serious than false prosperity. . The main reasons for this phenomenon are: the company's sales repayment speed is slow, and the money is not recovered after the shipment is shipped. If you check the accounts receivable in the balance sheet, it must increase significantly from the beginning of the period; the second is the inventory Backlog, large quantities of purchased raw materials have not yet formed products or products have not been sold.

Generally speaking, in the short term, cash flow per share is more indicative of the ability to engage in capital expenditures and pay dividends than earnings per share. Cash flow per share is usually higher than earnings per share, because the net cash flow generated by the company's normal operating activities will also include some cost adjustment items, such as depreciation charges, which are deducted from profits without affecting cash outflows. However, cash flow per share may also be lower than earnings per share.

Cash flow per share

The higher the cash flow per share of a company, the more cash flow each ordinary company earns in a fiscal year; otherwise, the less cash flow each ordinary share earns. Although cash flow per share can show the company's ability in capital expenditure and dividend payment in the short term than earnings per share, cash flow per share must not be used to replace the earnings per share as the main indicator of the company's profitability.