What Is the Profitability Index (PI)? - Investopedia
Jun 16, 2025 · Businesses use PI to determine if a proposed project will be a worthwhile investment. The profitability index (PI) measures the attractiveness of a project or investment. The PI is …
Profitability Index - Learn How to Calculate the Profitability Index
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 …
Profitability index (PI) - explanation, formula, example, application ...
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 …
Profitability Index Formula | Calculate Profitability Index (Examples)
What is the Profitability Index Formula? The formula for Profitability Index is simple and it is calculated by dividing the present value of all the future cash flows of the project by the initial investment in the …
Profitability Index (PI) | Formula + Calculator - Wall Street Prep
Oct 3, 2023 · The formula for calculating the profitability index is as follows. Profitability Index (PI) = Present Value (PV) of Future Cash Flows ÷ Initial Investment. Another variation of the PI formula …
Profitability Index Calculator | Good Calculators
It is calculated by dividing the present value of future cash flows by the initial amount invested. If the profitability index is greater than or equal to 1, it is termed a good and acceptable investment. The …
How to Calculate Profitability Index (PI) - With Examples and ...
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 …
Profitability Index Calculator
Profitability index (PI) is a capital budgeting tool that measures an investment or project's potential profitability. It is useful as an appraisal method for ranking investment projects and quantifying the …
Profitability Index: How to Calculate and Interpret It
Apr 1, 2025 · - The formula for calculating the PI is straightforward: \ [ \text {PI} = \frac {\text {Present Value of Cash Flows}} {\text {Initial Investment}} \] - A PI greater than 1 indicates that the project is …
Take the total discounted cash flows and divide it by the initial investment. If PI > 1 the project is profitable and should be accepted. If PI < 1 the project is not viable. A PI of 1 means that the project …