Free Cash Flow Yield Calculator
Free cash flow yield is a cash-based valuation gauge: the free cash flow a company generates as a percentage of its market value. Because it is built on actual cash rather than accounting earnings, it resists many of the distortions that affect price-to-earnings ratios. This calculator first computes free cash flow as operating cash flow minus capital expenditure, then divides it by market capitalization to give the yield. All figures are in US dollars; take operating cash flow and capital expenditure from the statement of cash flows and market cap from current share data.
Free cash flow yield formula
Free cash flow = operating cash flow - capital expenditure
FCF yield = free cash flow / market capitalization * 100
Free cash flow is the cash left after maintaining and growing the asset base. Dividing by market capitalization expresses it as a yield to equity holders, comparable across companies and against bond yields.
Using FCF yield
- Enter capital expenditure as a positive number; the formula subtracts it from operating cash flow.
- A higher yield can indicate cheaper valuation relative to cash generated, all else equal.
- Compare FCF yield to peers and to the risk-free rate rather than to a fixed target.
- This tool uses market cap, giving yield to equity; enterprise value would give yield to all capital.
- Enter figures from the company's own filings and current share data.
FCF yield: frequently asked questions
What is free cash flow yield?
Free cash flow yield is free cash flow divided by market capitalization, expressed as a percentage. It tells investors how much cash a company generates relative to its market value. A 6% FCF yield means the company produced cash equal to 6% of its market price over the period.
How is free cash flow calculated?
Free cash flow equals operating cash flow minus capital expenditure. Operating cash flow is cash from operating activities on the cash flow statement; capital expenditure is cash spent on property, plant, and equipment. The difference is the cash left for debt holders and shareholders.
Why is FCF yield useful?
FCF yield is a cash-based valuation gauge that is harder to distort than earnings-based ratios. A higher yield can indicate a company is cheap relative to the cash it produces, while a low yield may signal a richly valued stock. It is often compared to bond yields.
Should I use market cap or enterprise value?
This calculator uses market capitalization, giving the FCF yield to equity holders. Some analysts use enterprise value (market cap plus net debt) to measure yield to all capital providers. Choose the denominator that matches the claim you are analyzing; this tool uses market cap.
What is a good free cash flow yield?
There is no fixed benchmark. FCF yield is best compared across peers and against prevailing interest rates. A yield comfortably above the risk-free rate may suggest attractive cash generation, but growth prospects, debt, and the durability of cash flows all matter.
Official sources
- U.S. Securities and Exchange Commission, company filings and reports: sec.gov.
- Investor.gov, financial statement basics: investor.gov.
Reviewed by the CalculatorHub team, edited by James Graham, 17 June 2026. See our methodology.