Free cash flow yield is a return measure that compares the free cash flow of a company to its market value. A high free cash flow yield result means a company is generating enough cash to satisfy its debt and other obligations, including dividend payouts. Free cash flow, which excludes capital expenditures but considers other ongoing costs a business incurs to keep itself running, is an alternative representation of the returns shareholders receive from owning a business, and may be preferred to net income because it is more difficult to manipulate by management.

Formula:
The ratio is calculated by dividing the most recent trailing twelve months free cash flow by market cap.

FCFYield = FCFTTM / MktCap