分步说明
Gather Your Inputs
First, identify the annual cash flow from your investment. This can include rental income, dividends, or interest payments. Next, determine the total cash invested, which includes the initial investment amount and any additional cash infusions.
Apply the Formula
Next, plug in the numbers into the formula: Cash on Cash Return = Annual Cash Flow / Total Cash Invested. Make sure to use the correct units, such as dollars, and to perform the division correctly.
Calculate the Return
Perform the division to calculate the cash on cash return. For example, if the annual cash flow is $12,000 and the total cash invested is $100,000, the calculation would be: Cash on Cash Return = $12,000 / $100,000 = 0.12 or 12%.
Avoid Common Mistakes
One common mistake is to confuse the cash on cash return with the overall return on investment (ROI). The cash on cash return only considers the cash flow and cash invested, while the ROI takes into account the appreciation in value of the investment. Another mistake is to forget to include all cash flows, such as taxes and expenses, in the calculation.
Use a Calculator for Convenience
While it's possible to calculate the cash on cash return by hand, using a calculator can save time and reduce errors. Many online calculators and spreadsheet software, such as Excel, have built-in functions to calculate the cash on cash return. Simply input the annual cash flow and total cash invested, and the calculator will perform the calculation for you.
Interpret the Results
Once you have calculated the cash on cash return, you can use it to evaluate the performance of your investment. A higher cash on cash return indicates a better-performing investment, while a lower return may indicate that the investment is not generating sufficient cash flow. You can also use the cash on cash return to compare the performance of different investments and make informed decisions about where to allocate your capital.
Introduction to Cash on Cash Return
The cash on cash return is a metric used to evaluate the performance of an investment. It represents the annual cash return relative to the cash invested. In this guide, we will walk you through the steps to calculate the cash on cash return manually.
What is Cash on Cash Return?
The cash on cash return is calculated by dividing the annual cash flow by the total cash invested. The formula is:
Cash on Cash Return = Annual Cash Flow / Total Cash Invested
Example
Let's say you invested �KINL0�12,000 in annual cash flow. To calculate the cash on cash return, you would use the formula:
Cash on Cash Return = �KINL1�100,000 = 0.12 or 12%