Capital Budgeting
Profitability Index
Definition
What is Profitability Index?
Present value of future cash inflows divided by the initial investment.
Example in practice
How This Looks in Practice
A project with ₦120 million present value and ₦100 million cost has a 1.2 profitability index.
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Related Terms
Capital Budgeting
Net Present Value
Present value of expected cash inflows minus present value of expected cash outflows.
Capital BudgetingInternal Rate of Return
The discount rate that makes a project's net present value equal to zero.
Capital BudgetingModified Internal Rate of Return
A return measure that uses specified financing and reinvestment rates rather than assuming reinvestment at the IRR.
Company DisclosuresAnnual Report
A yearly publication containing financial statements, management discussion, governance information, and other disclosures.