P/V Ratio is Profit Volume Ratio which indicates the contribution earned with RESPECT to one RUPEE of sales. The fundamental property of P/V Ratio is that it remains constant at all the levels of activities, provided per unit sales price and variable COST remains constant. A high P/V ration indicates that a SLIGHT INCREASE in sales without corresponding increase in fixed costs will result in higher profits whereas a low P/V ratio indicates low profitability so that efforts can be made to increase the profits by increasing selling price or by reducing variable cost.

P/V Ratio is Profit Volume Ratio which indicates the contribution earned with respect to one rupee of sales. The fundamental property of P/V Ratio is that it remains constant at all the levels of activities, provided per unit sales price and variable cost remains constant. A high P/V ration indicates that a slight increase in sales without corresponding increase in fixed costs will result in higher profits whereas a low P/V ratio indicates low profitability so that efforts can be made to increase the profits by increasing selling price or by reducing variable cost.