Business planning

Profitability Index Calculator

Enter the present value of future cash flows and the initial investment to see the profitability index.

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Cash flows & investment

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$

Enter the present value and initial investment to see the profitability index.

Worked example

With these example inputs:

  • PV of future cash flows$12,000
  • Initial investment$10,000

Profitability index: 1.20

  • The other way round0.83
  • As a percentage120.0%
  • If the first figure were 10% higher1.32

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Frequently asked questions

How is the profitability index calculated?

Divide the present value of future cash flows by the initial investment. $12,000 of present value on a $10,000 investment gives a profitability index of 1.2.

How do I read the result?

An index above 1.0 means the project creates value and is worth considering. Below 1.0 it destroys value. It is handy for ranking projects when capital is limited.