It is widely used because it is simple, but it ignores the time value of money and cash flows after the payback point. It should therefore be used together with net present value and internal rate of return; the discounted payback period is an alternative.
Source: Yatırım analizi uygulaması
Related terms
Net present value and internal rate of returnNet present value is the discounted sum of an investment's future cash flows less the amount invested; the internal rate of return is the discount rate at which net present value is zero.Feasibility studyA study assessing whether an investment is viable from market, technical, financial and legal perspectives.Break-even pointThe sales volume or amount at which total revenue equals total cost and the business makes neither profit nor loss.BetaA coefficient measuring the sensitivity of a share's return to changes in the market return, that is, its systematic risk.Capital asset pricing model (CAPM)A model that calculates the cost of equity from the risk-free rate, beta and the market risk premium.Cash conversion cycleDays inventory outstanding plus days sales outstanding minus days payables outstanding, showing how many days cash is tied up in the operating cycle.
Last updated: November 8, 2026 · This definition is for general information only.