profit-volume ratio

a ratio used in MARGINAL COSTING and BREAKEVEN analysis which shows the CONTRIBUTION as a percentage of sales. For example, if the profit-volume ratio is 42%, then for every £100 of sales a contribution towards fixed costs and profit of £42 will be generated, provided that selling prices and unit variable costs do not change.

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The contribution margin ratio is also referred to as the profit-volume ratio. It is the ratio of the contribution margin to total revenue.

Cost, volume and profitability analysis. (Nuts and Bolts of Business)

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