MOIC (Multiple On Invested Capital)
Multiple on invested capital, or MOIC, is an investment return measurement. MOIC gives the investors the total return on their investments. If MOIC is 1.5X then the investors got a multiple of 1.5 on their invested capital. If the investors invest 20$ and MOIC is 1.5X then the investor’s current value is $30.
The main disadvantage of this index is that it does not relate to the value of time. There is a significant difference whether the fund achieved the said return within one year or within five years and the multiplier does not distinguish between a fund that achieved the return in one year or five years.
The multiplier is calculated by dividing the present value by the original investment amount. The present value is considering both the realized and the unrealized investments. For example, a fund that raised $ 100. The fund invested $ 50 dollars in two companies. One company was sold for $ 90 and another company has not yet been sold but its valuation is $ 60. The current investment value will be $ 90 + $ 60 = $ 150. The value of the multiplier will be 150/100 = 1.5. This index will be presented as follows: 1.5X.