financemodel.ai
Back to Variables
returnscalculatedCritical

Multiple of Invested Capital

Total value returned divided by total capital invested.

moicAlso: MOIC

Definition

Multiple of Invested Capital measures the absolute return on investment by comparing total distributions plus remaining value to total capital invested. Unlike IRR, MOIC does not consider timing but shows total value creation.

Why It Matters

MOIC is essential because it shows actual dollars returned. A 50% IRR on a $1M investment for 1 year is less valuable than 25% IRR on $100M for 5 years. MOIC captures total value creation.

Formula

= (Distributions + Remaining_Value) / Invested_Capital

Total value divided by invested capital.

Mathematical Notation
MOIC = \frac{Total\ Distributions + Remaining\ Value}{Total\ Invested}

Alternative Approaches

Realized MOIC= Realized_Distributions / Invested_Capital

Measuring only actual cash returned

Typical Ranges

Best Practices

Always pair MOIC with IRR. High MOIC with low IRR means slow returns. Distinguish realized vs unrealized for fund reporting.

Common Mistakes

  • ✕Ignoring follow-on investments when calculating invested capital
  • ✕Not distinguishing realized vs unrealized
  • ✕Comparing MOICs across different holding periods without context

Pro Tips

  • ✓Quick IRR approximation: if you know MOIC and years, IRR ≈ MOIC^(1/years) - 1
  • ✓Fund quartile data from Cambridge Associates shows typical MOICs
  • ✓Gross vs Net MOIC: management fees and carry make a big difference

Audit & Governance

Risk Level
Critical
Approval Required
director
Sensitivity
confidential
Track Changes
Yes

Learning Path

beginner

MOIC answers: "How many times did I get my money back?" A 2.0x MOIC means you doubled your money.

intermediate

MOIC doesn't consider time. 2x in 2 years is much better than 2x in 10 years. That's why you need both MOIC and IRR.

advanced

In PE, target 2.5x+ MOIC at 20%+ IRR for a "good" deal. The math relationship: MOIC = (1 + IRR)^years.

Used in Models

This variable is a key driver in the following financial models:

Standard LBO Model
private equity ma

Learn More

Deepen your understanding with these guided learning paths:

Valuation Models
intermediate•4-5 hours•6 modules
LBO Modeling for Private Equity
advanced•4-5 hours•6 modules

Related Variables in returns

Internal Rate of Return

Discount rate that makes the NPV of all cash flows equal zero.