Profitability Index
Also called: PI, benefit-cost ratio
The profitability index divides the present value of future cash flows by the initial investment, expressing NPV per dollar committed. It's the right tool under capital rationing: when you can't fund every positive-NPV project, ranking by index rather than raw NPV maximises value from a fixed budget. Above 1.0 means the project creates value.
Formula
PI = PV of future cash flows ÷ Initial investment