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How can anyone improve PV Ratio

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Rakesh Sahu asked over 2 years ago

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

When the contribution from sales is expressed as a sales value percentage, then it is known as profit/volume ratio (or P/V ratio). The relationship between the contribution & sales is expressed by it. Sound ‘financial health’ of a company’s product is indicated by better P/V ratio. **Improvement of P/V Ratio:** By the following ways, an improvement in this ratio can be achieved by: The selling price increase; but the risk that the volume of sales might be affected in involved in it. By purchasing the latest machinery, a reduction in the variable cost per unit can be achieved, thereby cutting the hours which may be required to complete each operation. However, higher fixed costs such as depreciation & insurance might offset this reduction. By concentrating on those products by which highest contribution can be achieved. For doing business analysis, in the hands of management, the P/V ratio is an invaluable tool.

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Data?1494421730 rohit awasthi answered over 2 years ago

Dear Friend > Improvement of PV Ratio PV Ratio can be improved by the following means -- By reducing the variable cost, -- By increasing the selling price, or -- By increasing the share of products with higher PV Ratio in the overall sales mix. Thanks

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