Profitability Index Definition: Profitability Index is a ratio of discounted cash inflow to the discounted cash outflow. Discounted cash inflow is our benefit in the project and the initial investment is our cost, which is why we also call it benefit to cost ratio. Profitability Index Method.
https://efinancemanagement.com/investment-decisions/profitability-index-pi-or-benefit-cost-ratio
Net present value. In finance, the net present value (NPV) or net present worth (NPW) is a measurement of the profitability of an undertaking that is calculated by subtracting the present values (PV) of cash outflows (including initial cost) from the present values of cash inflows over a period of time.
https://en.wikipedia.org/wiki/Net_present_value
Net present value (NPV) is determined by calculating the costs (negative cash flows) and benefits (positive cash flows) for each period of an investment. The period is typically one year, but could be measured in quarter-years, half-years or months.
https://en.wikipedia.org/wiki/Net_present_value
The formula used for calculating the Profitability index is: i = the interest rate per period (discount rate). n = the number of periods. Where the numerator shows the discounted sum of benefits and the denominator represents the discounted sum of costs related with a particular project. This equation can, however, also be used to infer the Internal Rate of Return (IRR) which arises when Profitability Index equals 1.
https://www.readyratios.com/reference/profitability/profitability_index.html
What is the 'Profitability Index'. The profitability index is an index that attempts to identify the relationship between the costs and benefits of a proposed project through the use of a ratio calculated as: PV of future cash flows/Investment.
http://www.investopedia.com/terms/p/profitability.asp
The profitability index (PI) refers to the ratio of discounted benefits over the discounted costs.
https://www.readyratios.com/reference/profitability/profitability_index.html
Profitability Index Rule. What is the 'Profitability Index Rule'. The profitability index rule is 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.
http://www.investopedia.com/terms/p/profitability-index-rule.asp
Capital Budgeting. Capital budgeting, which is also called investment appraisal, is the planning process used to determine which of an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing.
https://www.boundless.com/finance/textbooks/boundless-finance-textbook/capital-budgeting-11/introduction-to-capital-budgeting-91/defining-capital-budgeting-390-8292/
Capital budgeting, which is also called investment appraisal, is the planning process used to determine whether an organization's long term investments, major capital, or expenditures are worth pursuing.
https://www.boundless.com/finance/textbooks/boundless-finance-textbook/capital-budgeting-11/introduction-to-capital-budgeting-91/defining-capital-budgeting-390-8292/
profitability index. Ratio of the present value of a project's cash flows to the initial investment. A profitability index number greater than 1 indicates an acceptable project, and is consistent with a net present value greater than 0. Use 'profitability index' in a Sentence.
http://www.businessdictionary.com/definition/profitability-index.html
discounted profitability index definition
Profitability index is a ratio of discounted cash inflow to the discounted cash outflow. The definition of discounted profitability index is a ratio of discounted cash inflow to the discounted cash outflow.