profitability index

Profitability index: Measures the cost-benefit for the property investment.

As the value of the profitability index increases, so does the financial attractiveness of the proposed project.

Assuming that the cash flow calculated does not include the investment made in the project, a profitability index of 1 indicates breakeven.

Companies do so by considering the average rate of return, payback period, net present value, profitability index, and internal rate of return for various projects.

When the revenue is divided by the cost, the result is 4.11, which Kagan calls its Kagan Profitability Index (K.P.I.).

Operating income and consolidated net income increased 27.08% and 22.78% yoy, respectively, while profitability indices including ROA, ROE, and EPS improved compared to the previous year.

Once it has been determined that a particular project has exceeded its hurdle, then it should be ranked against peer projects (e.g. - highest Profitability index to lowest Profitability index).