Profit Volume Ratio

Posted in Finance, Accounting and Economics Terms, Total Reads: 5170
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Definition: Profit Volume Ratio

The profit volume ratio for any product, shows the relationship between the profits earned by the company and the volume of sales generated. The chart shows the profits generated by the company at different levels of sales and the outcome is used to determine the future of the business in the short run.


The PVR chart gives the profitability of the product, the optimal price at which the product has to be sold, the optimal quantity to generate maximum profits and the breakeven point.


The PVR Graph is given as follows,





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