What is Free Cash Flow Yield?
Free cash flow yield is a financial solvency ratio that compares a company’s expected free cash flow per share to its market value per share. The ratio is calculated by dividing free cash flow per share by the current share price. Free cash flow yield is similar in nature to the earnings yield metric and is often used to measure GAAP (generally accepted accounting principles) earnings per share divided by the stock price.
The formula for free cash flow yield is: