Free Cash Flow Yield Formula Top Example Calculation
What is Free Cash Flow Yield (FCFY) The higher the ratio, the more attractive the investment is since it indicates that investors pay less for each free cash flow unit. Many stakeholders consider cash flow a more accurate measure of a company’s performance than earnings since cash flow represents a firm’s ability to sustain its operations. Furthermore, free cash flow gives the company flexibility to increase its intrinsic valueIntrinsic ValueIntrinsic value is defined as the net present value of all future free cash flows to equity (FCFE) generated by a company over the course of its existence....