The formula to calculate the CLTV Ratio (R) is:
\[ R = \frac{CLTV}{CAC} \]
Where:
Let's say the Customer Lifetime Value (CLTV) is $10,000, and the Customer Acquisition Cost (CAC) is $2,000. Using the formula:
\[ R = \frac{10000}{2000} \]
We get:
\[ R = 5 \]
So, the CLTV Ratio (\( R \)) is 5.
The CLTV Ratio, or Customer Lifetime Value Ratio, is a metric used to measure the relationship between the lifetime value of a customer and the cost of acquiring that customer. This ratio is crucial for businesses to understand the return on investment (ROI) from their marketing and sales efforts. A higher CLTV Ratio indicates that the value generated from customers significantly outweighs the cost of acquiring them, which is a positive sign for business profitability and sustainability.
Definition: The Combined Loan-to-Value (CLTV) ratio is a measure of the total mortgage debt on a property compared to its appraised value.
Formula: \( CLTV = \frac{(First\ Mortgage\ +\ Second\ Mortgage)}{Appraised\ Value} \times 100 \)
Example: \( CLTV = \frac{(200,000 + 50,000)}{300,000} \times 100 \)
Definition: Calculate the Combined Loan-to-Value ratio for a property.
Formula: \( CLTV = \frac{(First\ Mortgage\ +\ Second\ Mortgage)}{Appraised\ Value} \times 100 \)
Example: \( CLTV = \frac{(150,000 + 30,000)}{250,000} \times 100 \)
Definition: Understand the differences between Loan-to-Value (LTV), Combined Loan-to-Value (CLTV), and Home Equity Line of Credit Loan-to-Value (HCLTV) ratios.
Formula: \( LTV = \frac{Loan\ Amount}{Appraised\ Value} \times 100 \)
Example: \( LTV = \frac{180,000}{300,000} \times 100 \)
Definition: Calculate the Combined Loan-to-Value ratio for a mortgage.
Formula: \( CLTV = \frac{(First\ Mortgage\ +\ Second\ Mortgage)}{Appraised\ Value} \times 100 \)
Example: \( CLTV = \frac{(220,000 + 40,000)}{320,000} \times 100 \)
Definition: Calculate the Loan-to-Value and Combined Loan-to-Value ratios.
Formula: \( LTV = \frac{Loan\ Amount}{Appraised\ Value} \times 100 \)
Example: \( LTV = \frac{160,000}{280,000} \times 100 \)
