A ratio of 1.0 is logically the lowest acceptable measure on the index. Any value lower than 1.0 would indicate that the project's PV is less than the initial investment. As values on the profitability index increase, so does the financial attractiveness of the proposed project.
Investment dictionary. Academic. 2012.
Profitability index — identifies the relationship of investment to payoff of a proposed project. The ratio is calculated as follows:(PV of future cash flows) / (PV Initial investment) = Profitability IndexProfitability Index is also known as Profit Investment Ratio,… … Wikipedia
Profitability Index Rule — A regulation for evaluating whether to proceed with a project or investment. The profitability index rule states: If the profitability index or ratio is greater than 1, the project is profitable and may receive the green signal to proceed.… … Investment dictionary
Profitability index — The present value of the future cash flows divided by the initial investment. Also called the benefit cost ratio. The New York Times Financial Glossary … Financial and business terms
profitability index — The present value of the future cash flows divided by the initial investment. Also called the benefit cost ratio . Bloomberg Financial Dictionary … Financial and business terms
profitability index — PI A method used in discounted cash flow for ranking a range of projects under consideration in which standard cash flow patterns are projected. It is based on the ratio: total present values of cash inflows/initial investment, the value of which … Accounting dictionary
profitability index — PI A method used in discounted cash flow for ranking a range of projects under consideration in which standard cash flow patterns are projected. It is based on the ratio: total present values of cash inflows initial investment, the value of which … Big dictionary of business and management
profitability — index utility (usefulness) Burton s Legal Thesaurus. William C. Burton. 2006 … Law dictionary
index arbitrage — An investment/trading strategy that exploits divergences between actual and theoretical futures prices . An example is the simultaneous buying ( selling) of stock index futures ( i.e., S&P 500) while selling (buying) the underlying stocks of that … Financial and business terms
American Customer Satisfaction Index — The American Customer Satisfaction Index (ACSI) is an economic indicator that measures the satisfaction of consumers across the U.S. economy. It is produced by the National Quality Research Center (NQRC) at the University of Michigan in Ann Arbor … Wikipedia
instability index of earnings — A measure of the deviation between actual profits of a company and trend profit. The higher the index, the greater the instability of a company s profitability … Accounting dictionary
