Valuation and investment
MOIC (multiple on invested capital)
How many times the money invested comes back.
Last reviewedWhat does MOIC (multiple on invested capital) mean?
MOIC is the total value returned from an investment divided by the amount invested. Invest 100 and get back 250, and the MOIC is 2.5 times. It is common in private equity. It does not show how long the money was tied up, so it is read together with IRR: 2.5 times in 3 years is far better than 2.5 times in 10 years.
Where does it come up in case interview prep?
- Sovereign wealth funds, national visions, trends and casesLesson in Government, public sector and non-profits
- Mergers, acquisitions, and due diligenceLesson
- How private equity and venture capital funds workLesson in Private equity and venture capital
- LBO returns and fund economicsLesson in Private equity and venture capital
Related terms
- IRR (internal rate of return)The discount rate at which NPV is exactly zero.
- LBO (leveraged buyout)Buying a company mostly with borrowed money.
- Return on investment (ROI)The gain from an investment relative to its cost.
- Payback periodHow long until an investment earns back its cost.
- Time value of moneyMoney today is worth more than the same money later.
- Discount rate and hurdle rateThe rate used to turn future cash into today's value.
- Cost of capital (WACC)The return a company must earn to satisfy its lenders and owners.
- Net present value (NPV)Today's value of all future cash flows, minus the upfront investment.