I use XIRR to calculate a compound annual return on investments. This
works fine when the first value is negative and the others are positive.
However I cannot get it to work for a short sale. For a short sale, you
are paid up front, and then you pay back the investment later.

If I have a short sale like:

1/27/2012 2/3/2012
$52 -$50

XIRR tells me it is an annualized return of -87.1% (NEGATIVE return, even
though it is net positive cash)

If I reverse this:

1/27/2012 2/3/2012
-$50 $52

XIRR tells me it is 673% annualized return. But at least it is positive.

Why does XIRR have problems dealing with positive cash up front followed by
negative cash flows?

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W