The cash-on-cash multiple does not consider which of the following?

The cash-on-cash multiple focuses on the cash generated by an investment relative to the cash invested, specifically measuring the income return on the actual cash invested. It does not factor in the timing of when the exit or liquidity event occurs—this is crucial because knowing when an investment is exited can significantly affect the overall return over the investment horizon but is not reflected in this multiple.

In contrast, the amount of capital invested, the time value of returns, and the length of the holding period are all relevant concepts when evaluating an investment’s performance. The cash-on-cash multiple effectively provides a snapshot of returns on invested cash without needing to account for the exit timing, making it a straightforward metric for investors to gauge the short-term profitability of their investment. This simplicity can be both a benefit and a limitation, as it may overlook broader factors impacting long-term investment success.