free cash flow yield

Definition

An indicator of the return expected per share. It equals free cash flow per share divided by the current market price per share (or equivalently, the company's overall cash flow divided by its market capitalization). This is similar to earnings yield, except it considers cash flow instead of earnings, and is used primarily by individuals who believe cash flow to be a more accurate indicator than earnings.

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The free cash flow yield was a good indicator for us and I was very happy to start working with the business.

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After some calculations regarding our potential free cash flow yield, we came to some sobering conclusions regarding our financial prospects for the coming quarter.

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My hedge fund manager always evaluates the free cash flow yield from each share because he believes that gives him an accurate measure of how much the company is actually earning.

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