Net cash flow from operating activities ratio (TTM)
factor.formula
Net cash flow from operating activities ratio (TTM) =
This formula calculates the ratio of net cash flow from operating activities to net profit for the past 12 months.
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Refers to the net amount of cash inflows from the main business activities of the enterprise in the past 12 consecutive months minus the net amount of cash outflows. This value directly reflects the actual cash obtained by the enterprise through daily operating activities and is a key indicator to measure the cash creation ability of the enterprise. It is usually derived from the net cash flow from operating activities item in the cash flow statement of the enterprise, and is calculated based on the TTM (Trailing Twelve Months), that is, the cumulative value of rolling 12 months.
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Refers to the total net profit achieved by the enterprise in the past 12 consecutive months, which is the final reflection of the enterprise's operating results in a certain period of time. This value comes from the net profit item in the enterprise's income statement, and is also calculated based on TTM (Trailing Twelve Months), that is, the cumulative value of rolling 12 months.
factor.explanation
The cash to net profit ratio of operating activities (TTM) reflects the quality of corporate profits. The higher the ratio, the higher the cash content of corporate profits, the more reliable its profits are, the more cash flow it has, and the lower its financial risk. When the ratio is less than 1, it means that the cash content of the company's net profit is insufficient, and there may be a large backlog of accounts receivable and inventory. Even if the company is profitable on paper, the actual cash flow may be tight, and it is easy to have difficulty in capital turnover, which may lead to increased business risks in the long run. Therefore, this indicator can effectively measure the authenticity and sustainability of corporate profits. In quantitative investment, this factor can be used to identify companies with good financial statement quality and profits supported by cash flow.