Cash Flow Volatility Calculator

Volatile cash flow is riskier than stable cash flow at the same average. This calculator computes the coefficient of variation (CV) — standard deviation divided by mean — to quantify year-to-year cash flow risk.

Year 1 cash flow

Year 2 cash flow

Year 3 cash flow

Year 4 cash flow

Year 5 cash flow

Coefficient of variation

15.49%

Mean annual cash flow

$73,200

Standard deviation

$11,338

Worst year

$58,000

Best year

$90,000

How the math works

Coefficient of variation = stdev ÷ mean. It normalizes volatility so you can compare a $50k deal to a $500k deal on risk.

Bond investors demand 50-100bps more yield for each 10% jump in CV. Real estate investors implicitly do the same — volatile deals should pencil to higher IRR or they're mispriced.

How to Use

Enter cash flow for each of the five years.
Read coefficient of variation (lower = more stable).

Frequently Asked Questions

What is a good CV?

Stabilized multifamily: <0.15 (15%). Retail/office with tenant renewal risk: 0.20-0.40. Value-add and development: 0.40+. Investors should demand higher yield for higher CV.

Why does it matter?

Volatile cash flow breaks DSCR covenants, triggers cash sweeps, and causes distributions to pause. Even if the deal pencils to target IRR, volatility destroys LP confidence and makes re-up fundraising harder.

How to reduce volatility?

Longer leases, diverse tenant mix, multi-year expense contracts, interest rate caps, reserves to smooth capex years, and conservative rent-growth assumptions.