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Use one common set of inputs
Initial outlay is 100 and the discounted sum of future receipts is 120. Net present value is therefore 20. Gross ratio = 120/100 = 1.2; net ratio = 20/100 = 0.2.
Compare the compatible thresholds
| Convention | Positive-NPV side | Zero-NPV point |
|---|---|---|
| Gross future-PV/outlay | Above 1 | 1 |
| Net NPV/outlay | Above 0 | 0 |
Explain why the ranking may be unchanged
When all projects use the same compatible definitions, subtracting one from each ratio preserves order. The values and threshold labels still differ, so a table must identify which convention is used.
Do not let either convention promise an optimal budget
A correctly labelled ratio remains a project-level summary. Whole-project budgets, dependencies and different outlay dates can require explicit feasible-set modeling rather than a descending list of ratios.