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 is the relationship between the profit & sales.In
formula it is expressed as P/V Ratio=
Contribution/sales*100.The higher the P/V Ratio better is
for company prospects.

P/V ratio express the relationship between sales and
contribution.In formulait is expressed as P/V Ratio=
contribution/sales*100, sales-variable cost/sales*100

profit volume ratio is a ratio which is calculated in order
to determine the relationship between sales volume and
profit of a company.The general formula of calculating p/v
ratio is as follows:

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

In business it is very tough to tell about the net profit
ratio of a particular activity undertaken by it because it
is easy to tell about the variable cost of that activity
but it is tough to tell about the fixed cost to be charged
on that activity therefore we subtract the variable cost
from the selling price and the amount so received is termed
as contribution which tells us about the amount contributed
from sales after variable cost to coverup the fixed cost.
And it is computed as :-
contribution/sales*100
which tells the per unit contribution towards fixed cost.

NEEDS:-To know the profitability of any business.
P/v ratio: Shows the relationship between contribution and
sales.
Usually expressed in percentage.
contribution =selling price-variable cost
=fixed cost+ profit or - loss
contribution
p/v ratio = -------------- * 100
sales

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