Startups
Cash flow multiple
A multiple of one means you got your money back; above one means a profit, and below one a shortfall.
The Formula
multiple = total inflow / initial investment
A multiple of one means you got your money back; above one means a profit, and below one a shortfall.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| M | Cash flow multiple | ratio | Times the outlay that has been returned. |
| Cn | Cumulative inflow | currency | Total cash returned over the horizon. |
| I | Initial investment | currency | Cash spent at the start of the project. |
What Each Symbol Means
Mratio
Cash flow multiple
Times the outlay that has been returned.
Cncurrency
Cumulative inflow
Total cash returned over the horizon.
Icurrency
Initial investment
Cash spent at the start of the project.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate payback period page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Payback Period, filed under Business. Every number the guide produces comes from substituting into this one line.