The standard of profit index is: if the profit index of the project is greater than 1, the project is acceptable; If the profit index is less than 1, it should be rejected; If the profit index of CFP financial investment is equal to 1, it makes no difference whether the company accepts or rejects this project.

Although there is no difference between profit index and scientific net present value, this method also has its inherent disadvantages. This is mainly manifested in the choice of mutually exclusive projects. If only one of the two projects can be selected, according to the net present value method, the project with larger net present value should be selected. However, the profit index of the project is likely to mislead the decision.

This also belongs to the CFP financial investment scale mentioned above. Like the internal rate of return, profit index, as a relative number, ignores the scale difference between mutually exclusive projects, which is easy to guide decision makers to choose projects with smaller CFP financial investment.

Extended data

If the CFP financial investment scale of mutually exclusive projects is equal, it is feasible to use the internal rate of return as long as the internal rate of return is high. However, when the scale of CFP financial investment is different, because the internal rate of return is a percentage return measurement index, it will tend to let decision makers choose smaller CFP financial investment projects.

Because compared with large-scale CFP financial investment projects, small-scale CFP financial investment projects are more likely to produce a high proportion of returns. In this case, the internal rate of return method cannot be directly used for project optimization.