What is the PV Ratio Formula? (3 Key Formulas)

The primary PV Ratio formula uses the relationship between contribution and sales:

PV Ratio = (Contribution / Sales) × 100

• Contribution is the money left over after you subtract variable costs from sales (Sales - Variable Costs).

This formula can be used with either per-unit figures (Contribution per unit / Selling Price per unit) or total figures (Total Contribution / Total Sales).

Other Useful PV Ratio Formulas:

Using Change in Profit: If you have data from two different periods, you can use:

PV Ratio = (Change in Profit / Change in Sales) × 100

Using Variable Cost Ratio: Since sales are either variable costs or contribution, the PV Ratio is the complement of the variable cost ratio.

PV Ratio = 1 - Variable Cost Ratio

(Where Variable Cost Ratio = Variable Costs / Sales)