Which performance metric is often used by investors to assess the effectiveness of their initial capital outlay?

Multiple on Invested Capital (MOIC) is a performance metric that provides investors with a straightforward way to evaluate the total value generated by their initial investment. It is calculated by taking the total distributions received from an investment and dividing that by the total amount of capital invested. MOIC gives a clear picture of how much value has been created relative to the money initially put to work, making it particularly useful for assessing effectiveness over the entire investment period.

This metric is highly regarded because it does not take time into consideration, which can be beneficial when investors are analyzing longer-term investments that may not yield quick returns. It helps investors quickly gauge the success of their capital outlay in generating returns.

Other metrics, such as cash-on-cash return, IRR, and distribution to paid-in capital (DPI), while useful, offer different perspectives. Cash-on-cash return provides insight into annual cash flows versus the cash invested, but doesn't encapsulate total investment performance over time. IRR factors in the time value of money, making it a more complex and dynamic measure, while DPI focuses specifically on the proportion of capital returned to investors relative to their contributions, offering a narrower view of performance. Thus, for assessing the effectiveness of the initial capital outlay