Realization Multiple

AAA

DEFINITION of 'Realization Multiple'

A private equity measurement that values the return paid to an investor. The multiple is named after the amount of return that is realized. The realization multiple is found by dividing the cumulative distributions from a project by the paid-in capital.

Realization Multiple

INVESTOPEDIA EXPLAINS 'Realization Multiple'

This method of valuing a project is often used by venture capitalists, and provides a return which can be compared across investment projects. The time value of money is ignored under this approach, which differentiates the realization multiple from other valuation methods, such as internal rate of return or net present value.

RELATED TERMS
  1. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
  2. Internal Rate Of Return - IRR

    The discount rate often used in capital budgeting that makes ...
  3. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  4. Paid In Capital

    The amount of capital "paid in" by investors during common or ...
  5. Time Value of Money - TVM

    The idea that money available at the present time is worth more ...
  6. Private Equity

    Equity capital that is not quoted on a public exchange. Private ...
Related Articles
  1. How Mortgage Refinancing Affects Your ...
    Credit & Loans

    How Mortgage Refinancing Affects Your ...

  2. How To Invest In Private Equity
    Mutual Funds & ETFs

    How To Invest In Private Equity

  3. Equity Premiums: Looking Back And Looking ...
    Bonds & Fixed Income

    Equity Premiums: Looking Back And Looking ...

  4. IPO Basics Tutorial
    Retirement

    IPO Basics Tutorial

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center