Which financial measure typically does NOT factor in future income timing?

The payback period is a financial metric that measures the time it takes for an investment to generate an amount of income sufficient to recover the initial investment cost. It focuses solely on cash flows, specifically how long it will take for the initial capital to be returned. The payback period emphasizes the time aspect without considering the timing of future cash flows beyond the moment when the investment is paid back.

As a result, it does not account for the value of money received later compared to earlier cash flows, which is a crucial aspect of evaluating the overall economic worth of an investment. This characteristic distinguishes it from other financial metrics, such as the internal rate of return or effective gross income, which do incorporate future income complexities, including the timing and value of those cash flows.