Free cash flow yield
Also called: FCF yield
Free cash flow divided by market capitalisation, showing the cash a business generates for its owners relative to its price.
Free cash flow yield is harder to flatter than earnings yield, because it records cash when it moves. A variant divides free cash flow to the firm by enterprise value to allow for debt. Check that free cash flow is not temporarily high from cutting necessary investment.
Learn more in these lessons
- Earnings, dividend and free cash flow yieldsHow do yields help you compare shares with each other and with bonds?
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