# 9 Profitability Index

9. Capital Budgeting - Profitability Index Method

Caption: The profitability index method is a technique in financial management used to assess the financial viability of a potential investment by calculating the ratio of the present value of expected cash inflows to the initial cost of the investment. A ratio greater than 1.0 indicates a financially viable investment, while a ratio less than 1.0 indicates an unviable investment. The method considers the time value of money and the timing and size of expected cash flows.

Keywords: Financial management, Capital budgeting, Profitability index, Net present value, Cash inflows, Present value, Initial cost, Financial viability, Investment, Time value of money, Timing, Cash flows.

1. Introduction
#1 Financial Management

2. Time Value of Money - Compounding Techniques
#2 Time Value of Money II Compounding

3. Time Value of Money - Discounting Techniques
#3 Time Value of Money II Discounting

4. Time Value of Money - Monthly / Quarterly Discount | Perpetuity | Annuity Due
#4 Time Value of Money II Perpetuity ...

5. Capital Budgeting - Accounting Profits vs Cash Flow | Depreciation and Cash Flow | Effect of loss on Cash Flow
# 5 Capital Budgeting Basics Part 2

6. Capital Budgeting - Types of Projects | Cash Flow : Outflow and Inflow | Working capital as Inflow and Outflow
# 6 Capital Budgeting Financial Manag...

7. Capital Budgeting - Payback and ARR Method
# 7 Capital Budgeting Techniques Pay ...

8. Capital Budgeting - Net Present Value Method
# 8 NPV Capital Budgeting

9. Capital Budgeting - Profitability Index Method
# 9 Profitability Index

10. Capital Budgeting - IRR - Internal Rate of Return
#10 Internal Rate of Return Financial...

11. WACC Fundamental - Cost of Capital
#11 WACC Cost of Capital  Part 1

12. Kd Cost of Debt - Cost of Capital
Lesson 12 Cost Of Debt Capital Cost o...

13. Kp and Ke -  Cost of Preference and Equity Share Capital -  Cost of Capital
Lesson 13 II Cost of Preference and E...

14. WACC Problem Sum - Cost of Capital
Lesson 14 Cost of Capital WACC Problem
#nitingoelclasses #financial Management Nitin Goel
PROFITABILITY INDEX
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