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Separate amount from time
A multiple can show 1.5 units of entered total value per unit of paid-in without identifying the years involved. A money-weighted rate needs dates and cash-flow signs. The measures complement one another rather than forming interchangeable labels.
Compare what the computations use
| Feature | Multiple | Investor IRR |
|---|---|---|
| Core record | Compatible cumulative amounts and residual | Dated signed transfers and terminal value |
| Time dimension | Not annualized | Specified intervals/date convention |
| Residual | Valued part of the numerator | Interim terminal value at its date |
| Caution | Basis and valuation compatibility | Root interpretation and cash-flow timing |
Identify the simple endpoint exception
With exactly one initial outflow and one final inflow, a terminal multiple can be annualized using the holding horizon. Multiple contributions and distributions remove that simple shortcut. Fund age is not automatically the correct exponent for a complex investor schedule.
Name the measure and its limitations
Report the ratio, its components and basis alongside any dated-rate calculation. A high displayed IRR can depend on timing, while a multiple can depend on a residual mark. Neither is a complete appraisal of a fund.