This relates the dollar amount of free cash flow to market cap, producing a yield comparable to a dividend yield or bond yield.
How it works
Free cash flow divided by market capitalization gives the FCF yield as a percentage.
What this does not include
This uses a single period’s free cash flow — a business with lumpy or seasonal cash flow may show a misleading yield in any one period, worth trending over several periods rather than reading in isolation.
How to use this calculator
- Enter free cash flow and market capitalization for the same period.
A worked example
Free cash flow of $2,000,000 against a market cap of $8,000,000: FCF yield = 2,000,000 ÷ 8,000,000 × 100 = 25%.
What the variables mean
| Variable | Meaning |
|---|---|
| Free cash flow | Cash generated after operating expenses and capital expenditures |
| Market cap | Total market value of the company’s outstanding shares |
Edge cases worth knowing
A higher FCF yield can signal an undervalued stock — it measures how much actual cash the business generates relative to what the market is paying for it, similar in spirit to earnings yield but based on cash rather than accounting profit.
Zero market cap makes the yield undefined — there’s no valuation to divide free cash flow by, so the calculator returns no result.
Frequently asked questions
How does FCF yield compare to earnings yield?
FCF yield uses actual cash generated after capital expenditures; earnings yield uses accounting net income, which can differ from cash flow due to non-cash items like depreciation.
What’s considered an attractive FCF yield?
Comparisons against a company’s own historical yield, industry peers, or the broader market’s average yield are typically more useful than any single fixed threshold.
Where does this calculator’s free cash flow figure come from?
This site’s separate free-cash-flow calculator computes the dollar amount directly from operating cash flow and capital expenditures.
