Benefit Cost Ratio - BCR

AAA

DEFINITION of 'Benefit Cost Ratio - BCR'

A ratio attempting to identify the relationship between the cost and benefits of a proposed project. Benefit cost ratios are most often used in corporate finance to detail the relationship between possible benefits and costs, both quantitative and qualitative, of undertaking new projects or replacing old ones.

INVESTOPEDIA EXPLAINS 'Benefit Cost Ratio - BCR'

As mentioned, the ratio is used to measure both quantitative and qualitative factors, since sometimes benefits and costs cannot be measured exclusively in financial terms. In cases where at all possible however, qualitative factors should be translated to quantitative terms in order for the results to be easily understandable and tangible.

RELATED TERMS
  1. Profitability Index Rule

    A regulation for evaluating whether to proceed with a project ...
  2. Future Value - FV

    The value of an asset or cash at a specified date in the future ...
  3. Present Value - PV

    The current worth of a future sum of money or stream of cash ...
  4. Shadowing

    The process of creating values for variables that don't rely ...
  5. Working Capital

    This ratio indicates whether a company has enough short term ...
  6. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
Related Articles
  1. Ratio Analysis Tutorial
    Fundamental Analysis

    Ratio Analysis Tutorial

  2. Calculating The Present And Future Value ...
    Investing Basics

    Calculating The Present And Future Value ...

  3. The Optimal Use Of Financial Leverage ...
    Investing Basics

    The Optimal Use Of Financial Leverage ...

  4. The Basics Of Financing A Business
    Entrepreneurship

    The Basics Of Financing A Business

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center