i What this calculator does
Free cash flow is what remains after a company has paid for the capital spending it needs to keep operating. It is the cash that can actually be returned to shareholders, which is why it is harder to manipulate than earnings.
The yield expresses it against the market price. A free cash flow yield of 8% means the business throws off eight cents of spare cash for every rand of market value, which can be compared directly against a bond yield or a fixed deposit rate.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the Free Cash Flow Yield Calculator
Every field has a working default, so the calculator produces a result the moment the page loads. Replace the defaults with your own figures and the output updates when you press the button.
- 1. Operating Cash Flow (R million)
- 2. Capital Expenditure (R million)
- 3. Market Capitalisation (R million)
- 4. Net Debt (R million)
- 5. Dividends Paid (R million)
- 6. Net Profit (R million) For cash conversion
The result panel reports:
- Free Cash Flow Operating cash less capex
- FCF Yield on Market Cap Comparable to a bond yield
- FCF Yield on EV Including debt
Alongside the headline figures, the calculator reports operating cash flow, capital expenditure, dividend cover, cash conversion. Those are the numbers that usually explain why the headline result came out where it did.
The breakdown below the result shows every step of the arithmetic, so you can check the figure rather than trust it. The formula panel names each input as it is used, which is useful if you want to reproduce the calculation in a spreadsheet.
Frequently asked questions
Why use cash flow instead of earnings?
Earnings include non-cash items and the timing choices management makes. Cash flow is harder to shape. A company reporting rising profit while free cash flow falls is worth a closer look, and the gap is usually in working capital or capitalised costs.
What is a good free cash flow yield?
It has to be judged against the alternative. With the repo rate at 7.25% and fixed deposits paying meaningfully more than they did, a free cash flow yield below the cash rate needs a growth story behind it. Above it, the business is producing more spare cash than cash pays.
Should I use maintenance or total capex?
Total capex is what the accounts report and is the conservative choice. Maintenance capex, the spending needed only to stand still, gives a truer picture of distributable cash but is rarely disclosed and has to be estimated.
What does negative free cash flow mean?
That the company is spending more on assets than its operations produce. For a growing business in an investment phase that can be entirely rational. For a mature business it is a warning, because the spending is being funded from debt or shareholders.
Why measure the yield on enterprise value too?
Because free cash flow is available to all providers of capital, not only shareholders. Measuring against enterprise value keeps the numerator and denominator consistent and makes companies with different debt levels comparable.
What is a healthy cash conversion?
Free cash flow at eighty percent or more of net profit suggests the reported earnings are being backed by cash. Persistently below that, across several years, usually means either heavy capital intensity or accounting that flatters the profit line.
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