Free Cash Flow Yield
Calculates the free cash flow yield ratio, which measures the free cash flow relative to the market capitalization of the company.
The free cash flow yield ratio is a measure of how efficiently a company generates free cash flow relative to its market value. It provides insights into whether the company’s valuation is reasonable compared to the amount of cash it generates.
The formula is as follows:
\[\text{Free Cash Flow Yield Ratio} = \text{Free Cash Flow} / \text{Market Capitalization}\]The free cash flow yield is the cash a company generates for its shareholders as a share of what the market pays for them, and is often set against bond yields or the dividend yield to judge how much room there is for dividends and buybacks. Free cash flow swings with capital expenditure and working capital, so a single year can mislead, and a high yield can also mean the market expects free cash flow to fall.
Also known as: FCF yield.
Free Cash Flow Yield in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_free_cash_flow_yield as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["MO", "PM", "BTI"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_free_cash_flow_yield()
Or, after setting up the Finance Toolkit MCP, ask:
What free cash flow yield did Altria, Philip Morris International and British American Tobacco offer from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| BTI | 0.1492 | 0.1348 | 0.1953 | 0.1505 | 0.0614 |
| MO | 0.0942 | 0.0976 | 0.1268 | 0.0959 | 0.0938 |
| PM | 0.0758 | 0.0619 | 0.054 | 0.0575 | 0.0427 |
Parameters
get_free_cash_flow_yield accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
show_daily | bool | Whether to show daily values: the close of each trading day against the statement figures of the latest period that has ended on or before that day (also when it ended before the start date), so no figures are used before their period closes. Defaults to False. | True |
diluted | bool | Whether to use diluted shares for market capitalization. Defaults to True. | False |
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses the trailing twelve months (4 quarters) with quarterly data and single years with annual data. | 4 |