Definitions for **"Profitability Index"**

A method used to evaluate projects. It is the ratio of the present value of expected future cash flows after initial investment divided by the amount of the initial investment.

The sum of the present values of the net cash flows divided by the net investment. A profitability index greater than one indicates an acceptable capital budgeting project.

The ratio of the present value of a project's cash inflows to the investment required.