What is a multiple on invested capital?

What is a Multiple on Invested Capital?

A multiple on invested capital (MOIC) is a performance metric that measures the total value returned to investors relative to the total amount of capital invested. It is calculated by dividing the total value received from an investment (through distributions and final value) by the original amount of capital invested. For example, if an investor receives $5 million in return from an initial investment of $2 million, the MOIC would be 2.5x, indicating that the investor received 2.5 times the original investment. MOIC is commonly used in private equity and venture capital to assess the overall return on investment without factoring in the time value of money.

In real estate, the Multiple on Invested Capital (MOIC) is used to evaluate the performance of real estate investments by measuring the return relative to the initial capital invested. This metric provides investors with a clear picture of how many times over they have regained their initial investment through income generated and capital appreciation upon the sale or valuation of the property. It means the same thing as Equity Multiple.