{"id":14158,"date":"2025-04-23T10:38:51","date_gmt":"2025-04-23T08:38:51","guid":{"rendered":"https:\/\/www.innowerft.com\/?p=14158"},"modified":"2026-08-10T00:58:31","modified_gmt":"2026-08-09T22:58:31","slug":"profitability-index-key-figure-for-investment-evaluation","status":"publish","type":"post","link":"https:\/\/www.innowerft.com\/en\/profitabilitaetsindex-kennzahl-zur-investitionsbewertung\/","title":{"rendered":"What is the profitability index?"},"content":{"rendered":"

The profitability index, or\u00a0PI<\/strong>, is a business metric used to evaluate investments. It shows how much economic return is expected in relation to the capital invested.<\/p>\n

The basic calculation is as follows:<\/p>\n

Profitability index = present value of expected cash flows \u00f7 investment costs<\/strong><\/p>\n

Alternatively, the profitability index can be calculated using the net present value:<\/p>\n

Profitability index = (net present value + investment costs) \u00f7 investment costs<\/strong><\/p>\n

The result is classified as follows:<\/p>\n\n\n\n\n\n\n\n
Profitability Index<\/strong><\/td>\nMeaning<\/strong><\/td>\n<\/tr>\n<\/thead>\n
greater than 1<\/strong><\/td>\nThe expected returns exceed the investment costs.<\/td>\n<\/tr>\n
equal to 1<\/strong><\/td>\nThe investment is expected to cover the costs incurred exactly.<\/td>\n<\/tr>\n
less than 1<\/strong><\/td>\nThe expected returns are lower than the investment costs.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

One example:<\/p>\n\n\n\n\n\n\n\n
Key figure<\/strong><\/td>\nAmount<\/strong><\/td>\n<\/tr>\n<\/thead>\n
Capital expenditure<\/td>\n100.000 \u20ac<\/td>\n<\/tr>\n
Present value of expected cash flows<\/td>\n125.000 \u20ac<\/td>\n<\/tr>\n
Profitability Index<\/td>\n1,25<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

A profitability index of 1.25 means that, for every euro invested, a discounted return of 1.25 euros is expected.<\/p>\n

The profitability index helps companies and start-ups to:<\/p>\n

    \n
  • to compare various investment projects<\/li>\n
  • to make targeted use of limited financial resources<\/li>\n
  • to prioritise economically viable projects<\/li>\n
  • To provide clear and transparent justifications for investment decisions<\/li>\n
  • to better categorise projects of different sizes<\/li>\n<\/ul>\n

    This ratio is particularly useful when there are several projects to choose from but there is not enough capital available for all the investments. A higher profitability index generally indicates a more favourable ratio between expected return and capital employed.<\/p>\n

    However, the profitability index should not be considered in isolation. Risks, time horizons, strategic objectives and the underlying assumptions can also influence the investment decision. Particularly in the case of young start-ups, future revenue and returns are often difficult to predict.<\/p>\n

    innoWerft helps start-up founders to assess the economic viability of investment projects and business models, to understand relevant key performance indicators, and to present financial assumptions in a clear and comprehensible manner for discussions with investors and other funders.<\/p>","protected":false},"excerpt":{"rendered":"

    The profitability index (PI) is an economic indicator that shows the relationship between the capital value of an investment and the costs incurred. A value greater than 1 indicates that an investment is economically viable. The PI helps to objectively compare different projects - especially when resources are limited.<\/p>","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","inline_featured_image":false,"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[47],"tags":[],"class_list":["post-14158","post","type-post","status-publish","format-standard","hentry","category-glossareintrag"],"yoast_head":"\nWas ist der Profitabilit\u00e4tsindex? - innoWerft<\/title>\n<meta name=\"description\" content=\"Der Profitabilit\u00e4tsindex bewertet Investitionen anhand ihres Nutzen-Kosten-Verh\u00e4ltnisses und unterst\u00fctzt fundierte Entscheidungen.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.innowerft.com\/en\/profitability-index-key-figure-for-investment-evaluation\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Was ist der Profitabilit\u00e4tsindex? 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