How it works
Profitability index = present value of future nonnegative cash inflows / initial investment.
Input definitions
- Cash flows, starting with negative investment
- Plain text; maximum 200,000 characters.
- Discount rate per period (%)
- Enter the value in the labeled unit.
A worked example
- Cash flows, starting with negative investment
- -1000, 600, 600
- Discount rate per period (%)
- 10
Assumptions & limits
One initial outflow and end-of-period inflows. Equal periods, constant discount rate; no project-size or capital-rationing analysis.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
What does a profitability index above 1 mean?
Future inflows have a present value greater than the initial investment at your entered discount rate, which corresponds to positive NPV for this conventional cash-flow model. It does not guarantee a return.
Are these investment and borrowing results guaranteed?
No. These are deterministic estimates from the inputs and stated method, not predicted returns or lending offers. Actual fees, tax, timing and contractual terms may differ.
How does the Profitability index tool work?
Profitability index = present value of future nonnegative cash inflows / initial investment.
What are the assumptions and limits of Profitability index?
One initial outflow and end-of-period inflows. Equal periods, constant discount rate; no project-size or capital-rationing analysis.