Benefit Cost Ratio - BCR

It's the same type of equation you quickly run in your head when your significant other unexpectedly asks "what do you think about an open relationship?"

In business, the Benefit Cost Ratio represents a key indicator in determining whether to move ahead with any particular project. It judges the cost-benefit relationship of any particular move.

In this context, the determination is forward looking, so the costs and the potential benefits of a particular project need to be estimated. Based on previous experience and whatever research is possible, analysts will determine the likely cost (in money terms) of a proposed project. Then they will figure out the likely benefits (again in terms of money) using similar techniques.

These figures are then plugged into the Benefit Cost Ratio. If benefits outweigh the costs, then the project is worth the effort. If not, it is likely better to shelve the proposal and move on. See the kissin' cousin Cost Benefit Ratio when you're bored.