plant and equipment are essential for the effective functioning of the enterprise.Improving the quality of their use can solve many problems associated with the production.And they affect both the individual company and the industry and, ultimately, on the economy of the whole country.Effective use of assets allows you to increase the volume of products, reduce production costs, improving productivity.This directly affects the increase in return on equity, profitability, and as a result - the growth of the standard of living of society as a whole.To achieve these goals, it is important to regularly review the extent to which equity capital now, applying for this different coefficients generalize.One of the most important in this case is the return on assets.It shows the level of turnover of the fixed assets and allows to determine how effectively they are used in production.It was about this one, we'll talk in the article.
Capital productivity: definition and meaning
As has been said, this ratio describes the level of use of available capital in the company, the industry and the economy as a whole.It is determined on the basis of two values - issued marketable product or gross value of fixed assets of production.
Assets ratio shows how much output per unit of fixed assets, and it is determined depending on the degree of their use and effectiveness.And the value of the produced goods can be both natural and monetary value (volume or value).And the rate of return on assets can be calculated for all funds, and only part of them.
calculation of return on assets: formula
at different levels of the economy can be calculated rate of return on assets.Shows it with the same - namely, the production efficiency in the application of capital, but at different scales.At the enterprise level for the calculation of this ratio is taken annual production, they produced.At the industry level is used the gross value added or gross output, and the scale of the economy - the value of gross domestic product.
Assets ratio indicates the amount of fixed assets or the value of the product, attributable to their unit (ruble).Calculate the ratio using the following formula:
product release / value of fixed assets.
As a rule, the annual average cost of capital is taken, however, a number of authors tends to another opinion of this indicator.So often in the formula used by the cost of acquisition of these assets (primary) or the value determined in this way:
(the funds at the beginning of period + assets at end of period) / 2.
In any case, the meaning of the calculation does not change.Capital productivity is the ratio of output to the media, it attached.
capital productivity and capital intensity
inverse indicator is considered by us a capital intensity ratio.You could say they are two sides of the coin.What does the capital productivity and capital intensity business owner?If the first indicates the degree of use of fixed assets, the second - about the need for them.Capital ratio shows the value of fixed assets attributable to the ruble of the manufactured product.It is defined by the formula:
1 / or capital productivity value of fixed assets / output.
calculating this ratio, the business owner receives information on how much funding should be invested in fixed assets, to get the required amount of product.If capital ratio decreases, it speaks of labor saving.
Both indicators characterize the efficiency of existing capital.If it rises, the rising and capital productivity and capital intensity, on the contrary, reduced.This favorable trend?and every business, one way or another, committed to it.
Factors affecting the return on assets
Assets ratio indicates how well the company operates.On this affects a lot of variety of reasons, including those that are outside of the production process.Let's see what improves return on assets:
- technical re-equipment, modernization and reconstruction;
- better use of capacity and working hours;
- reduction in the unit cost of power in the enterprise;
- change in the structure of funds (growth ratio between production and non-production facilities);
- better development of working capacity;
- market and other factors.
should also be taken into account and improving product quality.With other conditions unchanged, it also promotes a more efficient use of capital, increase capital productivity and therefore profitability.
Conclusion
To be effective, each enterprise should regularly calculate and analyze such factors as capital ratio and capital productivity.It shows a lot of analysis, because it allows us to estimate the degree of utilization of its enterprise fixed assets and determine the need for them to achieve a particular purpose of production.
