MOIC (Multiple on Invested Capital)
Corporate Credit Analysis glossary · Credit Metrics & Debt Schedule Modeling
Definition
Private equity return metric; total value returned divided by capital invested. Used in credit analysis when evaluating sponsor returns on a sponsored portfolio company.
MOIC (Multiple on Invested Capital) in plain English
MOIC answers the simplest question an investor has: "For every dollar I put in, how many dollars did I get back?" You just divide the total money you pulled out by the money you originally put in, so a 3.0x MOIC means $3 came back for every $1 invested. Think of buying a $100 concert ticket and reselling it for $250 — that's a 2.5x MOIC. Credit analysts care because the private-equity firm (the "sponsor") that owns a company is chasing a big MOIC, and understanding that goal tells you how much risk and debt they're likely to pile onto the business.
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