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Finance Calculators

Profitability Index Calculator

Verified formula Updated Jun 2026 Private — runs on your device

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Verified formula Private

Profitability index

1.200

Net present value
₹20,000.00

For general information only — not financial, tax, legal or medical advice. Verify before you rely on it.

How to use the Profitability Index Calculator

The Profitability Index Calculator works out your profitability index, along with 1 related figure in an instant. Enter present value of future cash flows and initial investment and the result updates as you type — it is free, needs no sign-up, and runs entirely in your browser so your figures stay private.

  1. Enter the present value of future cash flows.
  2. Enter the initial investment.
  3. Read off your profitability index, together with net present value — the calculator updates automatically, with no button to press.

Formula

The Profitability Index Calculator uses the formula:

Profitability index = Present value of future cash flows ÷ Initial investment

Worked example

For example, with present value of future cash flows of 120,000 and initial investment of 100,000, the profitability index is 1.200.

Inputs used
Present value of future cash flows 120,000
Initial investment 100,000
Results
Profitability index 1.200
Net present value ₹20,000.00

Results are estimates for educational use, not professional advice.

Key terms explained

Net present value
The present value of future cash flows minus the initial investment (NPV); positive means value is created.
Present value
Today's worth of money you will receive in the future, discounted for the time value of money.

Frequently asked questions

It is the present value of a project's future cash flows divided by its initial investment. A value above 1 means the project adds value.

A PI of 1.2 means each unit invested returns 1.2 units in present value terms, a 20% gain after discounting.

Both use discounted cash flows. NPV is the difference; PI is the ratio, which helps rank projects of different sizes.

When capital is limited and you must choose between projects, the index helps pick those with the most value per unit invested.

The Profitability Index Calculator uses the formula: Profitability index = Present value of future cash flows ÷ Initial investment. For example, with present value of future cash flows of 120,000 and initial investment of 100,000, the profitability index is 1.200.

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