Free cash flow to enterprise value (FCF/EV)
Free cash flow as a percentage of the value of the whole company including its debt.
It is the cash yield a buyer of the entire business, debt and all, would receive this year.
How it is computed here
Free cash flow / (market capitalisation + total debt - cash) x 100
Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business. Filed under risk. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Lumpy capital spending makes single years unreliable.
- A high figure on a heavily indebted company is not the bargain it looks like.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is free cash flow to enterprise value calculated?
Free cash flow / (market capitalisation + total debt - cash) x 100. Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business.
What does free cash flow to enterprise value tell a value investor?
It is the cash yield a buyer of the entire business, debt and all, would receive this year.
When does free cash flow to enterprise value mislead?
Lumpy capital spending makes single years unreliable. A high figure on a heavily indebted company is not the bargain it looks like.