DEFINITION of 'Free Cash Flow Yield'
An overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its market price per share. The ratio is calculated by taking the free cash flow per share divided by the share price. To illustrate:
BREAKING DOWN 'Free Cash Flow Yield'
Free cash flow yield is similar in nature to the earnings yield metric, which is usually meant to measure GAAP earnings per share divided by share price. Generally, the lower the ratio, the less attractive the investment is and vice versa. The logic behind this is that investors would like to pay as little price as possible for as many earnings as possible.
Some investors regard free cash flow (which takes into account capital expenditures and other ongoing costs a business incurs to keep itself running) as a more accurate representation of the returns shareholders receive from owning a business, and thus prefer to free cash flow yield as a valuation metric over earnings yield.

Bond
A debt investment in which an investor loans money to an entity ... 
Earnings Per Share  EPS
The portion of a company's profit allocated to each outstanding ... 
Free Cash Flow To Sales
A ratio that illustrates the percentage of free cash flow to ... 
Free Cash Flow  FCF
A measure of financial performance calculated as operating cash ... 
Free Cash Flow Per Share
A measure of a company's financial flexibility that is determined ... 
Cash Flow Return on Investment ...
A valuation model that assumes the stock market sets prices based ...

Fundamental Analysis
Discounted Cash Flow Analysis
Find out how analysts determine the fair value of a company with this stepbystep tutorial and learn how to evaluate an investment's attractiveness for yourself. 
Markets
How To Use PriceToSales Ratios To Value Stocks
Take a look at how this effective ratio can be influenced by certain critical factors. 
Forex
Understanding Free Cash Flow
Cash in the bank is what every company strives to achieve. Find out how to determine how much a company is generating and keeping. 
Markets
Free Cash Flow: Free, But Not Always Easy
Free cash flow is a great gauge of corporate health, but it's not immune to accounting trickery. 
Forex Education
Free Cash Flow Yield: The Best Fundamental Indicator
Cash in the bank is what every company strives to achieve. Find out how to determine how much a company is generating and keeping. 
Bonds & Fixed Income
Equity Premiums: Looking Back And Looking Ahead
If stocks become less profitable in the future, you may have to change your investment strategy. 
Economics
Understanding CostVolume Profit Analysis
Business managers use costvolume profit analysis to gauge the profitability of their company’s products or services. 
Fundamental Analysis
5 MustHave Metrics For Value Investors
Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know. 
Fundamental Analysis
5 Basic Financial Ratios And What They Reveal
Understanding financial ratios can help investors pick strong stocks and build wealth. Here are five to know. 
Investing
What Investors Need to Know About Returns in 2016
Last year wasn’t a great one for investors seeking solid returns, so here are three things we believe all investors need to know about returns in 2016.

What is Fibonacci retracement, and where do the ratios that are used come from?
Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >> 
What items are considered liquid assets?
A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted ... Read Full Answer >> 
Can working capital be depreciated?
Working capital as current assets cannot be depreciated the way longterm, fixed assets are. In accounting, depreciation ... Read Full Answer >> 
Do working capital funds expire?
While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >> 
Do you discount working capital in net present value (NPV)?
Net present value (NPV) calculations should include the discounted value of changes in working capital. This treatment of ... Read Full Answer >> 
How is working capital different from fixed capital?
There are several key differences between working capital and fixed capital. Most importantly, these two forms of capital ... Read Full Answer >>