XIRR

XIRR

Short definition

XIRR is the internal rate of return when cash flows are discounted on actual calendar dates, not equal periods. Milestone billing, tax instalments and FX conversions break the even-period IRR.

Detailed explanation

Classic IRR treats every period as equal length; construction, supply and tax calendars do not. XIRR carries each flow to the valuation date on a day-count. Spreadsheet XIRR uses a 365-day year and compounding; a 360-day or simple-interest contract is a different number.

Close dates, earn-outs and capital calls move XIRR versus period IRR. Fund reporting also uses XIRR (with TVPI/DPI); that is not the same as a corporate project IRR.

Why it matters for the CFO

If the investment committee hears “28% IRR” without asking which day cash moved, front-loaded outlays or late collections stay hidden.

How it is calculated

XNPV(XIRR) = 0 (nakitler gerçek takvim günleriyle iskonto edilir)

Each cash flow is discounted by (date − valuation date)/365; XIRR zeros that XNPV.

Variables in the formula

• XIRR: IRR on irregularly dated cash flows

How to read it

XIRR above period IRR often means cash arrived earlier or outflows later. Monthly versus annual boxing of the same project yields different IRRs; lock the decision on XIRR and XNPV.

Definitions are educational. They are not investment, credit or tax advice.