Jun 16, 2025 · The profitability index (PI) measures a proposed project's costs and benefits by dividing the projected capital inflows by the cost of the investment.

What is the Profitability Index? The Profitability Index (PI) measures the ratio between the present value of future cash flows and the initial investment. The index is a useful tool for ranking investment …

Apr 9, 2024 · Profitability index (PI) is the ratio of present value of a project’s expected future cash flow and initial investment needed to undertake the project. It helps companies and investors measure the …

What Is Profitability Index? Profitability Index (PI) shows the relationship between company projects future cash flows and initial investment by calculating the ratio and analyzing the project viability and …

In mathematical terms, the profitability index takes the shape of a ratio, dividing the present value of projected future cash flows by the initial investment required for the project: PI = present value of …

The Profitability Index (PI) or profit investment ratio (PIR) is a widely used measure for evaluating viability and profitability of an investment project. It is calculated by dividing the present value of …

May 8, 2025 · The Profitability Index (PI) is a key financial metric used to evaluate investment projects. It tells you how much value you’ll receive for every dollar invested — making it a favorite among …

Oct 3, 2023 · In short, the profitability index (PI) measures the attractiveness of a potential project or investment to guide decision-making. More specifically, the PI ratio compares the present value (PV) …

If you want to learn how to calculate your project's profitability index or learn how discounting works, keep reading! This article addresses how to use the profitability index calculation to rank project …

Nov 15, 2024 · But, the profitability index can get calculated using the following profitability index formula (s). Present value of future cash flows / the initial investment = profitability index