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| (PI).
| | An early stage technology company with a valuation of US$1 billion or more. |
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| ''Investment appraisal''
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| The profitability index of a project or other proposed investment may be represented by the following formula:
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| Profitability index = PV/Co
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| Where:
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| PV = the present value of all the cashflows except the initial investment.
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| Co = the absolute value of the initial investment.
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| Calculated on this basis, projects with a PI > 1 are acceptable.
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| ==Alternative definition==
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| The profitability index may also be represented by the following alternative formula:
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| Profitability index = NPV/Co
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| Where:
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| NPV = net present value of all positive and negative cashflows, including the initial investment outflow Co
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| When defined on this alternative basis, the minimum threshold of acceptability becomes a profitability index of 0.
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| == See also == | | == See also == |
| * [[Capital rationing]] | | * [[Private equity]] |
| * [[Present value]] | | * [[Unicorn]] |
| | * [[Venture capital]] |
Revision as of 20:14, 11 February 2017
An early stage technology company with a valuation of US$1 billion or more.
See also
