Question

there are three major financial statements are ordinarily required for external reports an income statement, a balance sheet, and a statement of cash flows. The purpose of the statement of cash flow is to highlight the major activities that directly and indirectly affect cash flows and hence affect the overall cash balance. Managers focus on cash flow statements for a very good reason without enough cash balance at the right time; a company may miss excellent opportunities or may even fall into bankruptcy. Does cash flow yield measure the net cash flows from operating activities about net income?

Answer 1

Yes, cash flow yield is basically calculated by dividing Net cash flow from operating activities by net income. It is used to estimate the ability of the company to generate operating cash flows in relation to net income.

It is basically a measure of how well the company generates cash flow out of its current operations. Some people also call it as the best fundamental indicator as it also represents the ability of the company to meet it's fixed payment obligations and shows the liquidity position of the company.

It is an important measure of a company's operating performance. The better the cash flow yield, the better is the company's present and future ability to meet its debt obligations.