DEFINITION of 'Liability Adjusted Cash Flow Yield  LACFY'
A fundamental analysis calculation that compares a company's longterm 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]
BREAKING DOWN '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.

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