Module IV· IRR / MOICIntermediate
Question
What is 'cash-on-cash return' and how does it differ from MOIC?
Answer
What
Cash-on-cash (CoC) and MOIC differ in their NAV treatment:
- Cash-on-cash = total cash distributed / cash invested. Includes NO NAV. Measures only realized success.
- MOIC / TVPI = (cash + NAV) / cash invested. Includes the mark-to-market of the unrealized positions.
At a full exit, both are equal. During the hold period, CoC is lower than MOIC because NAV isn't yet realized.
Deep diveShow more details
Example — full exit
| Item | Value |
|---|---|
| Sponsor equity investment | $100m |
| Year 3 recap distribution | $30m |
| Year 5 exit distribution | $200m |
| Total cash | $230m |
| Cash-on-cash | 230 / 100 = 2.3x |
| MOIC | 230 / 100 = 2.3x (equal, because fully realized) |
Mid-period (partially held)
| Item | Value |
|---|---|
| Cash distributed | $100m |
| Current NAV (unrealized) | $200m |
| Cash-on-cash | 100 / 100 = 1.0x |
| MOIC | (100 + 200) / 100 = 3.0x |
Common pitfalls
- "Cash-on-cash" is defined differently in a real-estate context (annual yield rather than total return): confusion is possible with mixed backgrounds.
- CoC before or after tax: typically before tax, but LP comparisons need consistency.
Pitch tip
Question: "Which metric do you use for real returns?"
Answer: "Cash-on-cash for realized performance, MOIC for the total position including NAV marks. LPs look at both — CoC measures what's in the bank account, MOIC what's on paper"