Liability Adjusted Cash Flow Yield - LACFY

AAA

DEFINITION of 'Liability Adjusted Cash Flow Yield - LACFY'

A fundamental analysis calculation that compares a company's long-term free cash flow to its outstanding liabilities over the same period. Liability adjusted cash flow yield can be used to determine how long it will take for a buyout to become profitable or how a company is valued. It is calculated as:


Average Free Cash Flow
[(Outstanding Shares + Options + Warrants) x (Per Share Price) - Liabilities] - [Current Assets - Inventory]

INVESTOPEDIA EXPLAINS 'Liability Adjusted Cash Flow Yield - LACFY'

Liability adjusted cash flow yield is not commonly used in company valuation. To see whether an investment is worthwhile, an analyst may look at ten years worth of data in a LACFY calculation and compare that to the yield on a 10 year Treasury note. The smaller the difference between LACFY and the Treasury yield, the less desirable an investment is.

RELATED TERMS
  1. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  2. 10-Year Treasury Note

    A debt obligation issued by the United States government that ...
  3. Warrant

    A derivative security that gives the holder the right to purchase ...
  4. Current Assets

    1. A balance sheet account that represents the value of all assets ...
  5. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  6. Inventory

    The raw materials, work-in-process goods and completely finished ...
Related Articles
  1. What Are A Stock's
    Investing Basics

    What Are A Stock's "Fundamentals"?

  2. Introduction to Types of Trading: Fundamental ...
    Trading Strategies

    Introduction to Types of Trading: Fundamental ...

  3. Understanding Liability-Adjusted Cash ...
    Forex Education

    Understanding Liability-Adjusted Cash ...

  4. Free Cash Flow: Free, But Not Always ...
    Markets

    Free Cash Flow: Free, But Not Always ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center