State the numerator and denominator
If an illustrative investment has contributed capital of 100, distributions of 70 and remaining value of 80, the simple multiple is (70 + 80)/100 = 1.5×. Keep the same valuation date and scope across the amounts. State whether fees and carried interest are included or excluded.
| Component | Amount |
|---|---|
| Contributed capital | 100 |
| Distributions | 70 |
| Remaining value | 80 |
| Total value divided by contributed capital | 1.5× |
The multiple does not incorporate time
The same 1.5× value multiple can arise over very different holding periods. MOIC alone therefore cannot answer how quickly the value was earned. A timing-sensitive return measure and a cash-flow timeline can add information that the value ratio leaves out.
Distinguish realised and remaining value
Distributions have been paid, while remaining value is a valuation estimate at the stated date. Comparing multiples without noticing that mix can hide important uncertainty. Do not treat a remaining valuation as though it were already a realised cash receipt.