EV/OP
EV/OP = Enterprise Value/Operating Cash Flow
EV = Market Value + Net Indebtedness
Operating Cash Flow = Cash flow before investments, after the changes to working capital.
A key figure for valuation that shows the Operating Cash Flow in relation to the Enterprise Value.
Operating cash flow is a good way to compare against the company's reported profit. EV/OP can be compared to e.g. EV/E or P/E.
Profit can be affected by accounting effects, but it is more difficult to influence cash flow. EV/OP is a more stable key figure than P/E for this.
Things to keep in mind
- A low value is good.
- Profit can be affected by accounting effects, but it is more difficult to influence cash flow.