Key financial ratios, growth rates, and rates of return - Yields

5 important questions on Key financial ratios, growth rates, and rates of return - Yields

What are very common yield ratios?

FCF yield and earnings yields (inverse of a P/E ratio)

What is free cash flow?

The actual cash that a business generates for its shareholders, after subtracting all costs.

The money shareholders could take out of the company without asset-stripping the company (without endangering the company's actual business).

What does a free cash flow yield offer?

A direct comparison to bond yields and saving bank yields, as it compares cash return with cash returns.
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As net earnings are directly contributing to shareholders' equity, they represent the earnings that?

Shareholders gained or lost every year.

Why are earnings important to shareholders?

As earnings boost the shareholders' equity (and the buy to hold a share).

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