Cost-benefit ratio

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Cost-benefit ratio

The net present value of an investment divided by the investment's initial cost. Also called the profitability index.

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.
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Crittenden's Insurance Profitability Indices finds that reinsurers are riding a wave of improvement fueled by single-digit rate increases, as are carriers focused on medical insurance.
Sentiments of the trade and hospitality firms in Saudi Arabia rebounded as the composite BOI gained 25 points to stand at 53 in Q4, 2014, with all the parameters comprising the index firming up over the previous quarter, with the demand and profitability indices posting the largest gains.
Profitability indices achieved by Itau have consistently been very high, reflecting the benefit of a cheap retail deposit base, which generates wide margins, significant international operations, and management's ability to anticipate trends and react promptly to Brazil's ever-changing operating environment.