The operating income yield is a return measure that compares the operating income of a company to its enterprise value. The ratio is calculated by dividing the most recent 12 months operating income by the current enterprise value.

All else equal, the lower the ratio the less attractive a company is as an investment, because it means investors are putting money into the company but not receiving a very good return in exchange. A high operating income yield means a company is generating enough cash to satisfy its debt and other obligations, including taxes and dividend payouts.

Operating income doesn’t include interest and taxes, while the enterprise value (EV) normalizes for differences in a company's capital structure. Therefore operating income yield normalizes differences in capital structure and taxation.

Formula

OpIncYield = 100 * OpInc / EV