Cash-on-cash return

Factual definition

Cash-on-cash can mean a cumulative cash multiple or an annual cash yield. State the period and numerator: cumulative cash received divided by invested cash is a multiple; annual cash available or distributed to the specified equity divided by that equity investment is a yield.

Cash-on-cash return in round numbers

If an investor puts in $10.0m and eventually collects $25.0m in cash, the cumulative cash multiple is 2.5x, excluding any residual unrealized value. Hanil’s profile describes one year of company financials rather than an investor’s cash contributed and cash returned, so no cash-on-cash figure applies here.

The author-attributed section below discusses the annual-yield usage: if $600,000 is annual cash for the same $4,000,000 investment, the annual yield is 15%. This differs from the cumulative 2.5x example.

Shayne Fitz-Coy’s definition of Cash-on-cash return

Fitz-Coy’s returns teaching opens with this number: $600,000 of cash against a $4,000,000 price is a 15% cash-on-cash return, and a 25% yield screen sets a maximum price of $2.4 million, the yield ladder ($2.4M → 25%, $3.0M → 20%, $4.0M → 15%) is cash-on-cash converted into price discipline. Leverage then modifies it symmetrically: two turns of debt shrink the equity check and raise the ratio, while the annual interest is owed in the good year and the bad one.

Because the numerator is cash rather than a mark, the ratio survives market moves that quieter valuations do not, when prices pull back, cash-on-cash is the number that still counts.

How Shayne Fitz-Coy uses Cash-on-cash return

Screen on cash yield first (what the business pays you to wait) then demand the multiple on invested capital (MOIC) and internal rate of return (IRR) layer for the whole journey. The pairing is the discipline: cash-on-cash without the multiple ignores the exit, and the multiple without cash-on-cash ignores the years in between.

Cash-on-cash is what the business pays you while you wait for the multiple to make up its mind.

Why Shayne Fitz-Coy’s perspective on Cash-on-cash return matters

It separates what you are paid to hold from what you hope to be paid to sell. For an owner with a permanent-capital horizon, that distinction is not a technicality, the second event may never come, and the first one pays monthly.