Free Cash Flow Yield Explained. Analysts may have to do additional or slightly altered calculations depending on the data at their disposal. The free cash flow yield measures the amount of cash generated from the core operations of a company relative to its valuation.
You should not depend on just one measure, of course. The free cash flow yield ratio is a good metric because it relies on two figures which are difficult for shady businesses to manipulate. Free cash flow yield explained.
It is the amount of money or transaction balance available to a company after satisfying all financial obligations.
In general, especially when researching dividend stocks, yields above 4% would be acceptable for further research. It was buffett who made the use of free cash flow popular for stock analysis. We can also compare the fcf yields to bond yields. What is considered as a good free cash flow?