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How is the LTV to CAC ratio calculated?

Divide customer lifetime value by acquisition cost.

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  1. CAC divided by revenue
  2. LTV divided by CAC ✔
  3. Cash divided by invoices

Why: The ratio compares expected customer value with the cost to acquire that customer. Both measures must use consistent definitions and comparable customer groups.

Huh, didn't know that: A high ratio can still hide a long wait before acquisition spending is recovered.

The dad joke
LTV and CAC became a ratio because they wanted to compare notes.
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References

Answer: LTV divided by CAC. The ratio compares expected customer value with the cost to acquire that customer. Both measures must use consistent definitions and comparable customer groups.

  1. Remitly investor presentation filed with the SEC www.sec.gov/Archives/edgar/data/1782170/000178217022000023/remitlyirdeck030222.htm
    the ratio of Lifetime value to Customer Acquisition Cost and is calculated as the Lifetime value divided by CAC.
    Checked 2026-10-11.

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