ROI and IRR (Why You Need Both)
Financial Modeling Educator Intro When evaluating an investment, especially in the Private Equity setting, two terms are often thrown around: ROI IRR What are they, and why do we need both? Let's discuss... The Big Picture ROI shows the return on my dollars. IRR shows my ROI adjusted for time. ROI (Easier One) ROI is short for "Return on Investment," and often goes by other names such as Multiple on Invested Capital ("MOIC") or "Cash on Cash." (they all basically mean the same thing) A Simple...