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Profitability Index |
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Profitability index The present value of the future cash flows divided by the initial investment. Also called the benefit-cost ratio. Cost-Benefit Ratio A ratio of whether or not and how much profit will result from an investment. It is calculated by taking the net present value of expected future cash flows from the investment and dividing by the investment's original cost. A ratio above one indicates that the investment will be profitable while a ratio below one means that it will not. A cost-benefit ratio is also called a profitability index. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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