How do you calculate MOIC
Positive cash flows divided by negative cash flows or the present value of positive cash flows divided by negative cash flows?
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Positive cash flows divided by negative cash flows. This calculates the multiple you make your investment.
puddingPositive cash flows divided by negative cash flows. This calculates the multiple you make your investment. I have a freshly minted mba associate who just joined the firm and he is trying to tell everyone to discount the positive cash flows because that's how he learned in his mba program…
What program is this? Just so I’ll know what program NOT to apply to
Positive cash flows divided by negative cash flows, or my preference - Profit / Total Contributions + 1
Tell your MBA associate he's an idiot, what the hell program taught him that? MOIC is a measure of expected total times you multiply your invested capital, time value of money isn't relevant to the calculation. That's why you take it in conjunction with IRR - he's trying to shortcut that into one metric.
Yeah tell that dummy to google what MOIC stands for lol
Yeah I was pretty baffled. It’s a top 10 mba program too
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