IntercontinentalExchange and Profitability index: Difference between pages

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(NYSE: ICE).  
(PI).  


An American financial company that operates internet-based marketplaces which trade futures and over-the-counter energy and commodity contracts, as well as derivative financial products.
The profitability index may be represented by the following formula:


Sometimes written Intercontinental Exchange.
Profitability index = PV/Co
 
Where:
 
PV = the present value of all the cashflows except the initial investment.
 
Co = the absolute value of the initial investment.
 
 
Calculated on this basis, projects with a PI > 1 are acceptable.
 
 
==Alternative definition==
 
The profitability index may also be represented by the following alternative formula:
 
Profitability index = NPV/Co
 
Where:
 
NPV = net present value of all positive and negative cashflows, including the initial investment outflow Co
 
 
When defined on this alternative basis, the minimum threshold of acceptability becomes a profitability index of 0.




== See also ==
== See also ==
* [[Commodity ]]
* [[Capital rationing]]
* [[Derivative instrument]]
* [[Present value]]
* [[Futures]]
* [[Over the counter]]
 
[[Category:Manage_risks]]
[[Category:Financial_products_and_markets]]

Revision as of 21:24, 11 April 2016

(PI).

The profitability index may be represented by the following formula:

Profitability index = PV/Co

Where:

PV = the present value of all the cashflows except the initial investment.

Co = the absolute value of the initial investment.


Calculated on this basis, projects with a PI > 1 are acceptable.


Alternative definition

The profitability index may also be represented by the following alternative formula:

Profitability index = NPV/Co

Where:

NPV = net present value of all positive and negative cashflows, including the initial investment outflow Co


When defined on this alternative basis, the minimum threshold of acceptability becomes a profitability index of 0.


See also