Cash on Cash ROI: Formula, Example & Investor Guide
Warren Team
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Key terms
- Cash FlowThe net amount of cash moving in and out of your accounts. Positive cash flow means you're earning more than you're spending, while negative cash flow indicates you're spending more than you earn.
- Return on Investment (ROI)A measure of investment profitability, calculated as (gain minus cost) divided by cost, expressed as a percentage. A $1,000 investment returning $1,200 has a 20% ROI.
- Institutional InvestorOrganizations that invest on behalf of others, including pension funds, mutual funds, insurance companies, and endowments. Control majority of stock market trading volume.
- Cash AdvanceBorrowing cash using a credit card at an ATM or bank. Typically charges a higher APR (25%+), immediate interest (no grace period), and a cash advance fee of 3-5%.
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