Profitability Index
Profitability Index is a financial metric used to evaluate the potential profitability of an investment or project. It is calculated by dividing the present value of future cash flows by the initial investment cost. A profitability index greater than 1 indicates that the investment is expected to be profitable, while a value less than 1 suggests that the project may not be worth pursuing. It is commonly used in capital budgeting to help decision-makers assess the viability of different investment opportunities.