Define cashflow in a business. How is it computed? If a company is trading at 7 times cash flow, what does?

Question

that mean?

Answer 1

There are a couple of measures of cash flow, but roughly, it's the amount of cash that a company either generates or uses up in a period. You basically take Net Income and adjust it for non cash expenses like depreciation and amortization to arrive at your cash flow.

If you have a company that is generating $1 of cash flow per share and it's trading at 7 times cash flow then it costs $7/share.