What Is P/V Ratio?


2 Answers

Anonymous Profile
Anonymous answered
It is the relationship between sales and contribution. This ratio helps to ascertain the profitability of the firm. The formula of
P/V ratio= Contribution/sales.
P/V ratio= Sales-Variable Cost/Sales
P/V ratio= Fixed Cost+ Profit/ Sales.
Muhammad Naufil Profile
Muhammad Naufil answered
The sales and marginal costs vary directly with the number of units sold or produced. So, the difference between sales and marginal cost, i.e. Contribution, will bear a relation to sales and the ratio of contribution to sales remains constant at all levels. This is profit volume or P/V ratio. Thus, p/v ratio = contribution /sales x100

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