If the Profitability Index (PI) = 1, it indicates that the project creates no value for the company or destroys value for the company, so they should be indifferent about whether to proceed or not.If the Profitability Index (PI) If the Profitability Index (PI) > 1, it indicates that the project generates value for the company, so they should proceed with it.Using the Profitability Index (PI), you can determine a project’s cost and benefits. It is important to understand the benefits you can receive when it comes to projects or possible investments. No matter what kind of business you run or what industry you work in, making a profit is essential to growing and expanding.
How to Interpret Profitability Index (PI) Profitability Index=(Net Present value + Initial Investment) / Initial Investment
