The Customer Lifetime Value to Customer Acquisition Cost (LTV:CAC) ratio compares the lifetime value of a customer to the cost of acquiring that customer. This ratio helps businesses assess the return on investment (ROI) of their customer acquisition efforts. A higher LTV:CAC ratio indicates more profitability from each customer relative to the acquisition cost.

The LTV:CAC ratio is calculated by dividing the Customer Lifetime Value (LTV) by the Customer Acquisition Cost (CAC).

\[\text{LTV:CAC} = \frac{\text{LTV}}{\text{CAC}}\]

Examples 

1. Basic Example: A company has an LTV of $1,200 and a CAC of $400. The LTV:CAC ratio is:

\begin{align}\text{LTV:CAC} &= \frac{1,200}{400} \cr&= 3\end{align}

2. Low-Ratio Example: A company has an LTV of $600 and a CAC of $500. The LTV:CAC ratio is:

\begin{align}\text{LTV:CAC} &= \frac{600}{500} \cr&= 1.2\end{align}