What does the price-to-cash-flow ratio help investors to determine?

The price-to-cash-flow ratio is a financial metric that investors utilize to assess the relative worth of a potential investment. It compares a company’s market capitalization (its price) to its cash flow from operations. By analyzing this ratio, investors can gain insights into how the market values the cash-generating capacity of a business, allowing them to evaluate whether a stock is overvalued or undervalued relative to its cash flow.

This ratio is particularly useful because cash flow is an important indicator of a company's ability to generate profits, pay dividends, and reinvest for growth, making it a more reliable measure than earnings, which can be manipulated by accounting practices. As a result, the price-to-cash-flow ratio provides a clearer picture of a company's financial health and investment potential, which is why it is the correct answer in this context.