Which financial metric complements cash-on-cash return for a comprehensive analysis?

Cash-on-cash return provides insight into the cash income generated by an investment relative to the amount of cash invested. To achieve a more comprehensive analysis of the financial performance of an investment, it is important to consider how well the cash flows can cover the debt incurred to finance that investment. This is where the debt service coverage ratio (DSCR) comes into play.

The DSCR measures the ability of an entity to generate enough income to cover its debt obligations, providing a clear picture of financial health in relation to leverage. By analyzing both the cash-on-cash return and the DSCR, investors can ascertain not only the returns on their cash investments but also the risk associated with their debt levels and the overall capacity to manage that debt effectively.

The other options, while they may have their own value in different contexts, do not serve as direct complements to cash-on-cash return in the same manner that the debt service coverage ratio does. For instance, net present value focuses on the value of future cash flows, which is not immediately related to cash returns or debt servicing. Gross rental income looks at total revenue without accounting for costs or financing, and revenue per employee provides metrics on operational efficiency rather than investment return and debt coverage. This makes the debt