1.5.7 Enterprise value to free cash

This ratio is the enterprise value (EV) of a company divided by its free cash flow (FCF), which refers to cash flow available to all capital providers (both equity and debt providers) of the company. A high EV/FCF may indicate that a company is overvalued, and vice versa.

where:

 is the equity value of company  at time .
 is the total debt of the company, including both long-term and short-term debt on the balance sheet.
 is the cash flow available for debt service (free cash flow) at time .
 is the senior debt service at time . 
 is the total cash in the bank at time .
 is the total cash in the bank at time .