Metric
Free Cash Flow Yield
Cash return you're effectively buying at today's price.
Formula
Free Cash Flow ÷ Market Cap
Definition
FCF yield is the inverse of P/FCF, expressed as a percentage. It makes valuation easier to compare against interest rates and other yields.
Why it matters
Treats the business like a bond: what's the cash return? An FCF yield well above the risk-free rate is one signal of an attractive investment.
Building blocks
- Free Cash Flow
- Cash left after operating expenses and reinvestment.
- Market Cap
- Total value of all shares outstanding at the current price.
Educational information only, not investment advice. Turtleway helps you understand what a metric or concept means; it does not tell you what to buy or sell.