Profit-Volume (PV) Chart

Definition of 'Profit-Volume (PV) Chart'


A graphic that shows the relationship between a company's earnings (or losses) and its sales. The chart tells how different levels of sales affect a company's profits. Companies can use profit-volume charts to establish sales goals, to analyze whether a potential project is likely to be profitable and to see the maximum potential profit or loss of a given project, as well as where the breakeven point lies.

Companies use PV charts in cost-volume-profit analysis along with breakeven charts and contribution charts.

Investopedia explains 'Profit-Volume (PV) Chart'


A company with significant fixed costs depends heavily on sales volume to achieve its profit goals. Hotels, for example, have a fixed number of rooms, and for each room they have purchased furniture, bedding, window treatments, air conditioning units, lighting, televisions and so on. The hotel also has to maintain its common areas regardless of the number of visitors it has on a given night.

So, in order to cover the costs of running the hotel restaurant, keeping the hotel pool clean, heating or cooling the hotel lobby and hallways, employing front desk staff and so on, the hotel must sell a certain number of room nights before it starts to earn a profit on a given night.



comments powered by Disqus
Hot Definitions
  1. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  2. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  3. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  4. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  5. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  6. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
Trading Center