Cash Return %

The company’s free cash flow divided by its "enterprise value, or market capitalization plus net debt. This number tells you what cash return you would get if you bought the entire company, including its debt.

Origin

We get the components of Cash Return % from primary sources, such an annual reports. This information is updated daily.

Benefit

Cash return is useful because it can be compared directly to other return numbers, such as the return on a 30-year Treasury bond. It’s comparable to other return-based valuation measures, such as dividend yield (dividends divided by market cap) and earnings yield (net income divided by market cap).

For the Pros

The actual formula we use for Cash Return is the following:

(EBITDA – Capital Spending)/(Market Cap + Preferred Stock + Long-Term Debt – Cash)

Where:

EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization.