The Cash Flow Margin is an important profitability ratio. It tells that how well a company converts sales to cash. Cash is of critical importance because it's required to pay expenses; therefore, conversion of sales dollars to cash is vital.
Cash Flow Margin = Cash flows from operating activities / Net sales
Suppose a company ‘ABC’ generates $250,000,000 in sales last year and had $2,500,000 in operating cash flow.
According to the formula, Cash Flow Margin is:-
= $2,500,000 / $250,000,000
Created: Jun 10, 2018
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