Free Cash Flow Yield Calculator
Measure how much free cash flow a company throws off per dollar of market value — free cash flow divided by market capitalization.
How it works
Free cash flow yield = free cash flow ÷ market capitalization × 100 · Price / FCF = market cap ÷ free cash flow
Free cash flow yield compares the cash a business actually generates — after the capital spending needed to keep running — against what the market pays for its equity. Unlike earnings yield it is hard to fake with accounting choices, so many investors treat it as the cleanest measure of value. A higher yield means you are buying more real cash per dollar invested; it is simply the inverse of the price-to-free-cash-flow multiple.
Worked example
A company produces $1,200,000,000 of free cash flow and has a $20,000,000,000 market cap. The free cash flow yield is 1,200 ÷ 20,000 = 6.0%, equivalent to paying about 16.7× free cash flow.
Frequently asked questions
What counts as free cash flow?
Free cash flow is cash from operations minus capital expenditures — the cash left after a company funds the investments needed to maintain and grow the business. It is the cash truly available to pay dividends, buy back stock or reduce debt.
Is a higher free cash flow yield better?
Generally yes for value buyers — it means more cash generation per dollar of market value. But an unusually high yield can also flag a business the market expects to shrink, so compare it against growth prospects and peers.
How does FCF yield relate to the P/FCF multiple?
They are reciprocals. A 6% free cash flow yield is the same as a price-to-free-cash-flow multiple of 1 ÷ 0.06 ≈ 16.7×.
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Educational estimate, not investment advice.