The capital productivity indicator is calculated using the volume formula. Return on assets

They are of great importance for the effective functioning of the enterprise. Improving the quality of their use can solve many problems associated with production. Moreover, they affect both an individual company and the industry and, ultimately, the economy of the entire country. Effective use of fixed assets allows you to increase the volume of output, reduce production costs, increasing And this directly affects the increase in return on capital, profitability and, ultimately, the growth of the standard of living of society as a whole. To achieve these goals, it is important to regularly analyze the degree of utilization by the enterprise using various generalization factors. One of the most important in this case is capital productivity. It shows the level of turnover of fixed assets and allows you to determine how efficiently they are used in production. It is this indicator that we will talk about in the article.

Return on Capital: Definition and Meaning

As already mentioned, this coefficient characterizes the level of use of available capital in an enterprise, industry and the economy as a whole. It is determined on the basis of two values - the issued commodity or the cost of fixed assets of production.

Capital productivity shows the volume of production per unit of fixed assets, and depending on this, the degree of their use or efficiency is determined. Moreover, the value of the goods produced can have both physical and monetary expression (volume or value). And the return on assets indicator itself can be calculated for all funds, and only for part of them.

Calculation of capital productivity: formula

At different levels of the economy, the capital productivity indicator can be calculated. At the same time, he shows the same thing, namely, the efficiency of production in relation to the use of capital, but on different scales. At the enterprise level, to calculate this coefficient, the annual volume of products produced is taken. At the sectoral level, gross or gross output is used, and at the scale of the country's economy, the value of gross domestic product is used.

The capital productivity of fixed assets shows the volume or cost of this product per unit (ruble). The coefficient is calculated using the following formula:

As a rule, the average annual cost of capital is taken, but a number of authors tend to have a different opinion regarding this indicator. Thus, the formula often uses the cost of acquiring these funds (primary) or a value determined in this way:

(funds at the beginning of the period + funds at the end of the period) / 2.

In any case, the meaning of the calculation does not change. Capital productivity shows the ratio of products produced to the funds invested in them.

Capital productivity and capital intensity

The opposite of the indicator we considered is the capital intensity ratio. You could say these are two sides of the coin. What does capital productivity and capital intensity show the owner of an enterprise? If the first speaks about the degree of use of fixed assets, then the second speaks about the need for them. Capital intensity illustrates the amount of fixed assets per ruble of product produced. It is determined by the formula:

1/capital productivity or cost of fixed assets / output.

Having calculated this coefficient, the owner of the enterprise receives information about how much financial resources need to be invested in fixed assets in order to obtain the required volume of production. If capital intensity decreases, then this indicates labor savings.

Both indicators characterize the efficiency of using existing capital. If it increases, then capital productivity also increases, and capital intensity, on the contrary, decreases. Is this a good trend? and every enterprise, one way or another, strives for it.

Factors influencing capital productivity

Return on assets shows how successfully the enterprise operates. This is influenced by many different reasons, including those outside the production process. Let's look at what helps increase capital productivity:

technical re-equipment, modernization and reconstruction;
better use of capacity and operating time;
reducing the cost per unit of power at the enterprise;
change in the structure of funds (increase in the ratio between production and non-production assets);
better utilization of working capacities;
market and other factors.

In addition, improvements in product quality should also be taken into account. All other things being constant, it also contributes to more efficient use of capital, increased capital productivity and, consequently, profitability.

Conclusion

To operate effectively, each enterprise must regularly calculate and analyze ratios such as capital intensity and capital productivity. Such an analysis shows a lot, because it allows you to assess the degree to which an enterprise uses its fixed assets and determine the need for them to achieve certain production goals.

Capital productivity is understood as an economic indicator that demonstrates the level of efficiency of the actual use of fixed production assets of a company, enterprise or industry as a whole. In other words, this indicator reflects the efficiency of the enterprise (organization, company) for the reporting period, and in the overall economic analysis of the organization’s activities it helps to assess the financial condition of each specific company.

Capital productivity reflects the performance of an enterprise or company for the reporting period

The most relevant calculation of the capital productivity indicator is for newly opened enterprises or organizations that have been operating for a long time, because a competent economic analysis carried out at this particular time will show the most truthful data about possible financial and economic problems in the enterprise.

How to calculate capital productivity: capital productivity formula

At the moment, capital productivity can be calculated using several variations of formulas, but the qualitative characteristics of this indicator do not change depending on the method of its calculation. In practice, most often only one formula is used for calculating capital productivity, which is expressed in the volume of products produced (revenue) for a certain period of time (year) divided by the cost of fixed assets (PF item) on average per year. For more convenient understanding, the formula can be written as follows:

Ф= Revenue/Average annual cost of fixed assets

Capital productivity is calculated using several variations of formulas, but the qualitative characteristics of this indicator do not change depending on the method of its calculation.

First of all, the correct calculation of this coefficient is necessary for accountants, economists, directors and company managers. The overall success of the enterprise’s activities often depends on directors and managers, therefore, by the indicator of capital productivity, it will be possible to determine the success of the enterprise during the management of the organization by one or another person. Also, the derived value of the capital productivity indicator will give the organization’s management a chance to take timely measures to adjust the company’s work, or to confirm the correctness of the choice of the current business strategy.

Thus, the higher the value of capital productivity, the better and more efficiently the enterprise operates. It is advisable to evaluate this coefficient over the past several years, as this will help to track certain patterns in the company’s work. If the capital productivity indicator is constantly kept at a low level, despite a change in the enterprise’s business strategy, then it is worth conducting a comprehensive economic analysis of the company’s activities, and based on the obtained data, look for the main reason for the poor performance of the organization.

Note that capital productivity only reflects possible troubles in the functioning of the enterprise, and does not show the specific reason for the failures. With proper and regular management of the organization’s economic activities, the capital productivity indicator should demonstrate a systematic increase, which is due to a reduction in downtime of equipment and technological machines, an increase in their productivity and the establishment of the most optimal load of technical resources, as well as the technical modernization of production fixed assets.

How to calculate the capital productivity ratio of fixed assets on the balance sheet

If we refer to the basic formula for calculating capital productivity, the denominator should reflect the revenue received over a certain period of time

To calculate the capital productivity of fixed assets on the balance sheet, you will need to refer to line 010 of the profit and loss report (form No. 2) and line 120 of the balance sheet (form No. 1) with the values at the beginning of the reporting period and, accordingly, at its end. Thus, the formula looks like:

Fo = line 010/0.5*(line 120 n + line 120 k)

If we turn to the basic formula, the denominator should reflect the revenue received over a certain period of time. The name of line 010 of the profit and loss report speaks for itself, since it is called “Revenue from the sale of products, goods, works, services,” and as can be seen from the formula, the denominator is revenue. However, it is always worth remembering that the calculation of this line implies revenue minus excise taxes, export duties and other regular mandatory payments.

When calculating capital productivity using the balance sheet, we enter the total value for this line in the denominator of the formula, and then proceed to Form No. 1 of the balance sheet. Line 120 of the balance sheet “Fixed assets” takes into account a certain part of the company’s property, which is directly involved in the production and sale of services or goods. These may include cash registers, machine tools, furniture, tools, etc.

When calculating capital productivity using the balance sheet, we enter the total value for this line in the denominator of the formula, and then proceed to Form No. 1 of the balance sheet

For the capital productivity formula, you will need the total value on line 120 at the end and at the beginning of the reporting period, since the formula requires the average value for the reporting period. There is nothing complicated about this: you just need to summarize the data at the beginning and end of the year, and divide them by 2 or multiply by 0.5. The result obtained will be the divisor when calculating capital productivity on the balance sheet. For clarity, let’s consider a real example based on the Kroverst enterprise. Line 120 in his balance sheet has the following values:

at the beginning (1) of the reporting period - 903,920;
at the end (2) of the reporting period - 885,220.

And line 010 of the income statement is expressed as 3,112,534. Now we plug these values into the formula and get the following:

Fo=3,112,534/0.5*(885,220+903,920)= 3,112,534/05*1789140= 3,112,534/894570=3.4

Thus, for each individual ruble of Kroverst’s total assets, there were 3.4 rubles of sales revenue.

Factors that actually influence the current capital productivity indicator

The capital productivity ratio clearly responds to any change in the functioning of the enterprise

The capital productivity ratio clearly responds to all changes in the functioning of the enterprise, but still the following factors can have the most obvious impact on the final result of the ratio:

age characteristics of the basic technological park;
degree of intensity of operation of equipment, technical machines and vehicles;
time indicator of turnover of all technological equipment;
timely control over the wear and tear of technological resources and machines;
quality and complete set of technological resources of the enterprise.

Capital productivity. Calculation formula. Analysis

In the article we will consider the capital productivity indicator of fixed production assets, as well as the calculation formula for an investment project.

Capital productivity. Definition

(English. Fixed assets turnover ratio) – a financial indicator characterizing the intensity and effectiveness of the use of fixed assets. The capital productivity ratio is used to analyze the financial condition of an enterprise and shows the effectiveness of managing the company's funds when analyzing its dynamics.

Formula for calculating the capital productivity ratio of fixed assets

Capital productivity ratio shows how many products were sold (produced) per unit of production assets. The calculation formula is as follows:

To assess the effectiveness of managing a company's production assets, the following indicators are used: capital intensity, material intensity, resource intensity, resource productivity.

Normative value

The capital productivity ratio does not have a single standard value. Each enterprise determines its own acceptable levels of turnover of production assets. Analysis of capital productivity is carried out over several years, which allows us to assess the nature of the trend.

Example of calculating capital productivity

Factor analysis of capital productivity

To determine the strength of influence of various economic factors on the level of capital productivity, factor analysis is used in practice. Let's consider a two-factor, four-factor and seven-factor model of capital productivity.

Two-factor model of capital productivity

The two-factor model shows how the value of the capital productivity ratio is influenced by the structure of production assets.

F a – active part of fixed production assets;
N – volume of manufactured and sold products of the enterprise;
F – fixed production assets.

Seven-factor model of capital productivity

The model makes it possible to assess the degree of interaction between the level of capital productivity of an enterprise and seven factors: the structure of fixed production assets, the structure of machinery and equipment in active assets, the shifts of machines and equipment, the average cost of a unit of equipment, the duration of a machine shift, and the efficiency of equipment operation. The formula looks like this:

Fmash – average cost of operating machines and machines;
T cm – number of machine shifts;
с – average cost of equipment;
Q d – number of machines and machines;
I – duration of the period under consideration;
T h – the number of hours worked by machines and machines.

Four-factor model of capital productivity

This model allows us to determine the nature of the interaction between the level of capital productivity of the enterprise and the level of specialization, the coefficient of average capacity of the enterprise, the structure of fixed production assets and the turnover of the active part of production assets.

Where:
N oc – the main products of the company;
W – average annual capacity of the enterprise.

Management of capital productivity of the enterprise

Capital productivity management occurs on the basis of revenue management and the size of the enterprise's fixed production assets. An enterprise’s capital productivity can be increased based on the following factors:

Increase labor and equipment productivity.
Increase equipment utilization.
Automate production.
Introduce new technologies and innovations into production and production.
Develop a distribution network of buyers.
Increase the quality and competitiveness of products.

finzz.ru

Capital productivity is the formula for calculating the balance sheet. Let's look at a specific example

The economic activity of an enterprise can be analyzed using a number of indicators. Very often, for this purpose, financial analysis uses data from financial statements, in particular the balance sheet and the income statement - forms No. 1 and No. 2. One of the important indicators of enterprise performance is capital productivity.

Return on assets - definition

In financial analysis, this is an indicator characterizing the effectiveness of investments in fixed assets of an enterprise. It shows what share of revenue comes from each ruble invested in them. Thus, the analyzer will be able to say how effectively machines, equipment, machinery and other fixed assets are used in business activities.

The indicator is calculated based on data from regular financial statements.

Capital productivity. Balance calculation formula.

The basic formula of the indicator is given below:

Capital productivity = revenue from sales: fixed assets.

Thus, the total revenue from the sale of the enterprise must be divided by fixed assets in value terms. We take all data from the financial statements - from the balance sheet, form No. 1 (f-1) and profit and loss report (f-2).

The company's revenue is reflected in F-2, line 2110.

The cost of all fixed assets of a company can be calculated from F-1 data. Since the balance sheet shows us data at the beginning and end of the reporting period, we need to find the average value of the indicator for the period. To do this, the value of line 1150 at the beginning of the period and the same line at the end of the period are summed up and divided by two. That is:

(line 1150 at the beginning + line 1150 at the end): 2

As a result, the capital productivity formula can be rewritten as follows:

Capital productivity = line 2110/((line 1150 at the beginning + line 1150 at the end):2)

Capital productivity is the formula for calculating the balance sheet. Example

Let's look at a specific example. To do this, we present the data from the accounting statements of Caprice LLC in abbreviated form.

We calculate the capital productivity of the enterprise:

Capital productivity = 3,500,000/((163,000 + 170,000):2) = 21.02

Thus, for every ruble of investments invested in the company’s fixed assets, there is a share of 21 rubles in sales revenue.

The resulting result can be compared with data from the industry, market niche, and competitors. There is no standard indicator with which it could be compared. Capital productivity can be analyzed over a number of years. An increase in its value will signal an increase in the efficiency of use of the company's fixed assets.

Mezentseva Vasilisa

copdoc.ru

What is capital productivity: calculation formula

Fixed assets and the specifics of their operation by the company are of global importance for overall development. Improving the quality of these elements will be the optimal solution to the problems and difficulties of production: increasing the volume of products that are produced through the use of equipment, reducing costs used to form production costs, increasing labor productivity.

Such changes are designed to have a tremendous impact on return on capital, and ultimately on the profitability of operations. In order for these goals to become a reality, firms must regularly conduct analytical studies of the use of funds by calculating general ratios, in particular, return on assets.

Capital productivity shows the level at which the turnover of fixed assets occurs within the enterprise.

Thanks to this indicator, the effectiveness of their use in the production process is determined.

Capital productivity is an indicator of the efficiency of fixed assets

The influence of various factors on the capital productivity indicator The success of a company is influenced by a number of factors, capital productivity is the first of them.

But it is also influenced by various parameters, such as:
armament and reconstruction;
perfect use of available capacities;
reduction in cost per unit of power;
changes in the structure of funds;
market development factors;

quality of the goods offered.

The profitability of the company depends on these phenomena.

Carrying out settlement actions

This indicator can be applied at different economic levels. Capital productivity demonstrates the same phenomena, in particular the efficiency of production, in relation to the capital used, but the calculations are carried out on different scales:
company level;

In the first case, the volume of the product produced is applied. In the second - output within the framework of the country's economic position (GDP).

At both levels there are differences in the calculation actions carried out, however, the indicator is general and characterizes the same phenomenon. Note:

The main purpose of the indicator is to demonstrate the volume and cost of the product per unit (ruble).

The return on assets formula looks like this:
Where – FO means a directly calculated indicator,
VP – volume of production,

SOF – demonstrates the value of funds.

Traditionally, economic activity uses the basic cost of capital for the year, but some book authors suggest taking other indicators into account. Often the formula includes the total cost at which these funds were purchased, called primary, or a value equal to the amount of funds at the beginning and end of the period, divided by two. The general meaning of settlement operations remains unchanged.

Indicators of capital productivity and capital intensity

We have looked at what return on capital is; it is worth taking into account another serious indicator that has the opposite meaning and understanding. It can be noted that capital intensity and capital productivity are two sides of the coin and characterize the company’s activities in general terms, but from different positions.

The capital intensity indicator is calculated using the following formula:

Where – VP – manufactured products.

After a thorough calculation of the indicator has been carried out, the owner of the company can obtain information about the need for financial resources to replenish fixed assets in order to obtain the required output volume. If the value of this indicator decreases, this indicates insufficient productivity. Two indicators reflect the efficiency of using existing capital.

Standard value of capital productivity

We've looked at how to calculate return on capital, but there are several factors that are considered regulatory and require attention. In general, this coefficient does not have a general meaning, since it varies depending on the industry, the scale of the enterprise’s activities, and the region. For example, in production with normal capacity indicators, the share of fixed assets located among assets is quite large, so the value of the coefficient will be much lower. If we consider the value of this indicator in dynamics, then with its growth there is an increase in the efficiency of equipment use. For example, you can manufacture products with greater added value, or increase the time of use of equipment by increasing the number of shifts. Some enterprises act more radically, completely replacing old equipment with new and progressive ones.

Using the capital productivity indicator in practice

Return on assets is used in the process of settlement operations on the efficiency of use of funds. When under normal development conditions, the indicator should increase, regardless of the situation.

The formula for calculating capital productivity takes into account numerous influencing factors, therefore, they can also affect the final calculation indicator. These factors may include changes in the ratio of funds, changes in the structural apparatus of equipment, reconstruction or modernization, changes in output volumes and in the degree of capacity utilization.

At both levels there are differences in the calculation actions carried out, however, the indicator is general and characterizes the same phenomenon. In view of the enormous range of indicator values, it is necessary to take into account the influence of the above reasons on its value. The indicator is useful when comparing the efficiency of production organization.

Analysis of indicator dynamics: what you need to pay attention to

When carrying out analytical work regarding changes in the value of the indicator, it is important to carry out an analysis of individual elements, including changes in the share of production assets, changes in the structure of the general public fund and equipment productivity.

How to increase capital productivity

There are several real methods of increasing the indicator that really work:

through changes in the structure of funds;
increasing the value of the computer time utilization factor;
reduction of total downtime at the enterprise;
transition to the production of goods with high added value;
general increase in productivity and activities.

Thus, the indicator is important for any industrial enterprise within the framework of its activities, informing management about the possibility of changes being carried out and modern technologies being used. When calculating the indicator, one has to deal with pitfalls; often companies end up using the services of third-party companies. Increasing this parameter may take a lot of time, but after it, the company will take a new path of development and increase profit indicators.

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101biznesplan.ru

Formula for calculating capital productivity - capital productivity

Turnover ratios show the return on investment. One of these ratios is the total capital productivity. Return on assets is an economic indicator and one of the important performance indicators of any company. It allows you to draw conclusions in a timely manner about how correctly the company’s economic activities are structured in modern market conditions.

It should be noted that the capital productivity indicator itself does not indicate how production assets are used, effectively or not, but only shows what ratio the volume of products received from sales (i.e., revenue) has with the cost of the means of labor available to organizations

The total asset turnover ratio or Total asset productivity (resource productivity, capital productivity) R TAT (Total Asset Turnover Ratio) is calculated as follows:

R TAT = Sales Proceeds / Average Property Value

This formula reflects production output per unit of property. It is often referred to as the main parameter of asset management quality. In analysis, it is typically used in comparisons of asset efficiency between firms. A high level of this ratio shows good ability of managers to use funds effectively. Low capital productivity indicates an absolutely ineffective use of funds. Although it happens that such a comparison is incorrect:

for example, if there are some differences in accounting policies;
overstatement of revenue;
different levels of equipment wear,
There is an inflationary rise in prices for finished products.

When an internal analysis is carried out, with a low value of the capital productivity ratio, a significant conclusion is made that the volume of activity is not high enough for this amount of assets. Therefore, the first thing to do is to increase sales. However, if sales cannot be increased, then certain types of assets should be written off.

The high value of capital productivity should direct the efforts of managers to search for various types of investments in order to expand this production.

Considering this indicator of capital productivity, we can conclude that it relates to turnover indicators (accounts receivable, inventory turnover, other assets). The ratio of revenue to certain assets or liabilities is always calculated as turnover indicators.

Example.
Calculation of total capital productivity (total asset turnover ratio) for OJSC MMC Norilsk Nickel in 2008:

R TAT = 13,980,000,000/28,259,500,000 = 0.49

Thus, in 2008, for every ruble of the company’s total assets, there were 49 kopecks in sales revenue. In 2008, assets turned over only 0.49 times and “paid off” only half.

Dynamics of the capital productivity indicator of assets of OJSC MMC Norilsk Nickel for the period 2005 - 2008. shown in the figure above.

The company's total capital productivity since 2007 also shows a downward trend. This most likely indicates an ineffective policy for managing the assets of a legal entity.
In the period under review, the growth rate of assets often exceeds the growth rate of revenue. For example, since 2007, assets have grown by 119% with revenue growth by 44%. On the other hand, in certain periods, the growth rate of assets may exceed the growth rate of revenue, since assets can be introduced spasmodically, while revenue usually increases more smoothly.
If the negative dynamics of capital productivity of OJSC MMC Norilsk Nickel persists, it is advisable to revise the sales management strategy and investment strategy, as well as liquidate non-core assets.

Normal value

The capital productivity ratio does not have a common standard value. In connection with the above, capital productivity depends heavily on the characteristics of each industry. For example, where there are capital-intensive industries, the capital productivity there will be lower, because the share of fixed assets in the assets of the enterprise is large. If the capital productivity indicator is considered in dynamics, then its growth indicates an increase in the efficiency of equipment use.

Therefore, to increase capital productivity, you need to:

Increase the amount of revenue without changing the composition of fixed assets used (in the period under review):
a) increase the efficiency of its use by producing products with greater added value;
b) increase the time when equipment is used, for example, the number of shifts, using more productive and modern equipment;
Write off unnecessary equipment, thus reducing its cost in the denominator of the coefficient.

financialsovety.ru

balance calculation formula:: BusinessMan.ru

Financial analysis of any enterprise cannot do without studying the effectiveness of the use of fixed assets. To do this, analysts use an indicator such as capital productivity. The formula for calculating it on the balance sheet allows you to identify negative aspects in the organization of the main factors of production available to the company. Based on the analysis, economists and financiers can draw conclusions about ways to improve the balance sheet structure, which will allow them to receive greater profits in the future period. This is why the calculation of the capital productivity formula is so often used in financial and economic analysis.

Definition

The capital productivity of fixed assets is a financial ratio, the formula of which characterizes the efficiency of their use. It shows how much revenue the enterprise receives per unit of resources invested in production assets. In other words, capital productivity, the formula for calculating the balance of which will be discussed below, gives an assessment of the feasibility of using the means of labor relative to the revenue received as a result of their use.

To assess the efficiency of using fixed assets, the capital productivity indicator must be analyzed over time. This will make it possible to determine the financial condition and competence of management activities in terms of the use of funds. The practice of comparing the obtained indicator with the same results of competing enterprises is widely used.

Calculation formula

Capital productivity, the calculation formula for which is presented below, is as follows:

Ф = Sales revenue/Fixed assets

In order to draw correct conclusions based on the data obtained, the indicator of the number of production assets should be taken as the arithmetic average for the reporting period.

The data from accounting report No. 1 and No. 2 will help you make calculations. Capital productivity, the calculation formula for the balance of which allows you to draw conclusions about the state of factors of production, has the following form:

F = s. 2110 f. 2/(p. 1150 beginning f. 1 + p. 1150 con. f. 1)/2

In its general principle, the presented indicator is similar to turnover ratios.

Normative value

Return on assets, the formula of which was discussed above, does not have a general normative meaning. In each industry, the coefficient under consideration differs in its value.
In industries that require a large amount of equipment and expensive equipment in the production of finished products, the capital productivity indicator will be lower than in production that uses cheap equipment in small quantities.

Therefore, comparison of the analysis results is carried out in dynamics and based on indicators from a study of the financial and economic activities of enterprises in this industry. Only on the basis of such studies can conclusions be drawn about the competence of production asset management.

Capital productivity analysis

Capital productivity, the formula for calculating the balance sheet of which was carried out by analysts over several years, must be interpreted correctly. If in the period under review the ratio decreased, this indicates a decrease in the financial stability of the company and an insufficiently effective policy in the field of use of production capacity.

With a gradual increase in capital productivity, we can draw a conclusion about the correct, harmonious development of the company. Competent, appropriate use of production assets led the enterprise in this case to increased financial stability.

The capital productivity indicator, the calculation formula of which helps to calculate the industry average, should be compared with the results of an analysis of the activities of competitors. If the capital productivity ratio exceeds the interindustry value, we can say that the competitiveness of the analyzed organization has increased. And vice versa.

Two-factor and four-factor analysis of capital productivity

To determine what factors influence changes in the indicator of production assets, a certain type of analysis should be performed. It allows you to take a deeper look at the coefficient. Using two-factor analysis, capital productivity, the balance formula of which is calculated by the analyst at the initial stage, is studied in terms of the influence of the structure of production assets on it. The two-factor model is calculated as follows:

F2 = Af/F*O/Af, where Af is the active part of production assets, F is fixed assets of production, O is the volume of product sales.

The analysis can also take into account 4 factors - the level of specialization, the power of the company, the structure of production assets and the turnover of active means of production.

F4 = O/Oosn.*Oosn./Med.*Af/F*Med./Af, where Oosn. ‒ the main product of the enterprise, Msred. ‒ average annual capacity of the enterprise.

Seven-factor analysis of capital productivity

The seven-factor analysis model allows you to deeply evaluate all the elements that influenced the efficiency ratio of production facilities. The capital productivity of fixed assets, the formula of which shows only a general picture of the state of the means of labor, would be incomplete without the following analysis.

This technique allows you to assess the degree of influence in the production process of the structure of fixed assets, equipment, machines, shifts of machine tools, the average annual cost of each piece of equipment, the duration of operation of the equipment, and its efficiency.

The method is calculated as follows:

F7 = Af/F*Sm/Af*Ks/M*Dp*1/St*Chm/Ks*O/Chm, where Sm is the average annual cost of machines and machines, Ks is the number of equipment changes, St m is the average cost of labor, M is the number of machines, Dp is the duration of the period, Chm is the number of hours worked by the equipment.

Capital productivity management

After calculations, the capital productivity, the formula of which was presented above, requires adjustment. You can manage this indicator using revenue and the size of fixed assets. To increase capital productivity, it is necessary to increase the productivity of labor and equipment. To do this, you can automate production processes and increase equipment utilization.

It is also possible to increase capital productivity by introducing scientific developments and innovations into the production process. An increase in the distribution network will allow increasing sales. By improving product quality, good results can be achieved.

Having familiarized yourself with such a coefficient as capital productivity, the formula and analysis of which is necessarily used by analytical services, you can understand ways to improve it. By justifiably increasing production capacity, introducing innovations in technology, expanding the distribution network, it will not be difficult to ensure the development and prosperity of production.

businessman.ru

Capital intensity ratio of fixed assets. Calculation formula

In the article we will analyze such an economic coefficient as capital intensity, as well as the formula for calculating the indicator for a business plan.

Capital intensity

Capital intensity– a financial indicator characterizing the efficiency of management of fixed production assets and shows the amount of fixed assets per unit of produced (sold) product. The main means of production include: buildings, structures, equipment, machinery, transport, production equipment, i.e. that which ensures the production process of the enterprise. This indicator is actively used in countries with socialist economies to justify production plans for the entire country.

Formula for calculating the capital ratio

The capital intensity ratio is inversely proportional to capital productivity and the calculation formula is as follows:

To calculate this ratio, both accounting and production reports are used, showing the volume of products produced.

In practice, a modification of the capital intensity ratio is used, where the average annual value of fixed production assets is used, as well as revenue from the sale of manufactured products. This indicator is calculated only from the balance sheet, and the formula is as follows:

This capital intensity formula reflects the degree of payback of fixed production assets.

Capital ratio analysis

This coefficient does not have a generally accepted standard value and is analyzed over several years. The table below shows an analysis of the company's capital intensity over time.

Indicator value	Analysis of coefficient dynamics
K fund.e ↗	An increase in the capital intensity indicator shows a decrease in the efficiency of production.
K fund.e ↘	A decrease in the capital intensity ratio shows an increase in the efficiency of using production equipment and capacity in the production of products.
K fund.e > K * fund.e	An excess of the capital intensity level over the industry average (*) shows a decrease in the efficiency of production in relation to similar companies in the industry.
K fund.e< К * фонд.е	A decrease in the level of capital intensity in relation to the industry average (*) shows an increase in the efficiency of using fixed production assets.

Capital intensity of industries

The capital intensity ratio characterizes the level of optimization of the entire production process and is used in assessing the efficiency of both enterprises and industries. The capital intensity of an industry shows the ratio of production assets to gross marketable output.

There are two types of capital intensity in the industry: direct and full. Direct reflects the performance of fixed production assets involved in the creation of products, while total capital intensity includes, in addition to fixed assets, funds indirectly involved in the production of products. Currently, this indicator is auxiliary than capital productivity. Read more about capital productivity in the article “Capital productivity of fixed production assets.”

finzz.ru

Return on assets is a coefficient that directly characterizes the efficiency of using an organization's financial resources. It is thanks to capital productivity that you can find out how much revenue one unit of the cost of fixed assets brings in. So, let's look at how to calculate capital productivity.

Separately, the capital productivity indicator does not indicate at all whether the productivity of fixed assets is effective or not, but shows the degree of ratio of the volume of revenue that was received after the company sold goods to the cost of fixed assets available to the organization. Regarding the efficiency of using fixed assets, correct conclusions can be drawn by comparing the capital productivity indicator over several years, or by comparing this indicator with the capital productivity of similar enterprises.

Calculation of capital productivity indicator

Capital productivity is revenue divided by the company's fixed assets.

Thus, capital productivity is calculated. The calculation formula is quite simple, so you can calculate this indicator without resorting to the help of specialized programs.

Indicators should be taken by calculating their arithmetic average for the entire period, which has a positive revenue value.

The turnover indicator is a component of the capital productivity indicator. It is also necessary when analyzing the profitability of an enterprise.

Normative value

It is worth noting that the capital productivity ratio itself cannot have normative significance. Depending on industry characteristics, this indicator is largely subject to change in different industries. If production is, for example, capital-intensive, then the coefficient will be lower; if we consider the indicator in its dynamics, then with an increase in the indicator, we can state the intensity of use of production equipment.

Thus, if you want to increase capital productivity, you should either increase the revenue indicator when using the appropriate equipment, or manufacture products that would have greater added value.

The article discussed how to determine capital productivity. It is this coefficient that is necessary to determine the profitability of an enterprise.

For manufacturing enterprises, the most important factor in analyzing financial and economic activities is assessing the return on investment. The organization's fixed assets are non-current assets, i.e. the funds invested in their purchase will be returned in stages, over several production cycles. Accordingly, the more efficiently they are used, the faster the enterprise returns the invested own or borrowed financial resources. When assessing the activities of an enterprise, founders, credit institutions, and owners consider indicators characterizing fixed assets. These include capital productivity, capital profitability, capital-labor ratio and capital intensity.

Characteristics of the capital productivity ratio

To calculate the capital productivity ratio, a single formula is used; the calculated values of the mathematical components can be adjusted depending on the purposes of calculating the indicator. The basic rule for correct analysis of return on investment is to track the dynamics of the obtained value. For comparison, a basic value taken as a single positive level for a specific enterprise can be used, or the indicators of the current calendar period can be compared with the previous one. Also, a prerequisite for the objectivity of the obtained coefficient is the units of measurement used in the calculation; they should not change in the comparable periods (most often this is a thousand rubles). The procedure for calculating the indicator “capital productivity” - the formula for calculating this coefficient - implies that it refers to the values characterizing the turnover of non-current assets. The renewal rate of inventory, accounts receivable, interbank supplies, and other types of assets involved in the production process is calculated in a similar way.

Factors influencing capital productivity

The value of the coefficient, which indicates the level of turnover of the general fund, is significantly influenced by a number of factors:

The volume of products sold in a certain period (in some cases, the indicator of produced, released products is taken into account).
Performance of the main active part of the equipment.
Reducing downtime, shortened work shifts, days.
Level of technical perfection of equipment and machines.
Structure of the OPF.
Equipment utilization level.
Increasing labor productivity and non-current assets.

Formula for calculating capital productivity

The coefficient is calculated as the ratio of the output, produced (sold) of the enterprise to the cost of the general fund, the result is an indicator that indicates how many products are produced (sold) per unit of funds invested in the general fund. Let's look at a generalized calculation of the capital productivity indicator. The calculation formula is as follows: Fo = Vpr/Sof, where Fo is the total capital productivity; Vpr - manufactured products for the selected period; Sof - the cost of fixed production assets. This calculation option is used to obtain a generalized indicator that must be calculated for all production departments, otherwise the elements of the numerator and denominator will have to be specified.

Denominator adjustment

The capital productivity formula in the denominator contains the value of fixed assets. To obtain a correct indicator, the values of the numerator and denominator must reflect the actual calculated data. The cost of fixed assets can be calculated as follows: OSsr = OSn + OSk / 2, i.e. the book value of the OPF at the beginning of the period is summed up with the data at the end of the period, then the resulting value is divided by 2 (to obtain the arithmetic average). This number can be expanded and specified by including in the calculation the cost of fixed assets acquired during the period, disposed of as a result of sale or complete wear and tear. The indicator also changes in case of revaluation of funds. Many analysts prefer to use the value of the residual value of fixed assets - it can be defined as the difference between the book price at a certain moment (account 01 in the balance sheet) and the amount of depreciation of fixed assets (balance sheet account 02) accrued over the entire period of operation. When taking into account the structure of the general operating fund, only active (participating in the production process) fixed assets are taken into the formula for calculating capital productivity, i.e. machines, machines, equipment, depending on the specialization of the enterprise. The assets of the enterprise that are on reserve, leased, modernized and not operated during the analyzed period are subtracted from the total cost. As part of the operating system, it is necessary to take into account leased or leased units of equipment. They may be reflected in off-balance sheet accounts, so their value does not fall into account 01, which affects the receipt of incorrect data when analyzing an indicator such as capital productivity. The formula, or rather its denominator, must be increased by the value of the leased property.

Numerator adjustment

The volume of products produced in the analyzed period is necessarily adjusted for the amount of taxes, i.e., VAT and excise taxes paid are subtracted from the total volume of goods sold. Products sold in total terms are indexed to the inflation rate to obtain comparable indicators. It is possible to use average contract prices for sold products to calculate capital productivity. To calculate the capital productivity ratio (the general formula was discussed above), the volume of products produced over a certain period can be structured by divisions and by type of product. In this case, output volume indicators should be correlated with the cost of fixed assets involved in the production of a specific type of product.

Analysis of capital productivity indicator

The coefficient obtained when calculating capital productivity is analyzed by comparison with similar data obtained in other periods, or with the level of the planned indicator. The dynamics of the values will show an increase or decrease in the operating efficiency of the OPF. Positive dynamics indicate the proper use of fixed assets, which leads to an increase in production, and, consequently, sales (in the case of a stable level of demand). A decrease in the calculated level of capital productivity indicator is not always a negative aspect of the enterprise’s activity. Therefore, it is recommended to carefully weigh all the factors influencing its value. To increase capital productivity, if this is objectively necessary, several methods are used.

Ways to increase capital productivity

To increase the capital productivity ratio, it is necessary to increase the operating efficiency of the operating system at current sales rates. The following methods exist:

Reducing equipment downtime by organizing multiple work shifts.
Incentives for personnel - a direct dependence of wages on product output is introduced.
Increasing the technical level of personnel will make it possible to avoid downtime by reducing the number and time of repairs.
Modernization of equipment, commissioning of more technologically advanced machines.
Sales of mothballed equipment, decommissioning of machines with a high level of physical wear and tear or obsolete.

These methods will allow you to gradually increase the economic result from investing financial flows in fixed production assets, without cutting production costs.

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Capital productivity analysis

Two-factor and four-factor analysis of capital productivity

F2 = Af/F*O/Af, where Af is the active part of production assets, F is the fixed assets of production, O is the volume of product sales.

The analysis can also take into account 4 factors: the level of specialization, the power of the company, the structure of production assets and the turnover of active means of production.

F4 = O/Oosn.*Oosn./Med.*Af/F*Med./Af, where Oosn. main products of the enterprise, Ms. average annual capacity of the enterprise.

Seven-factor analysis of capital productivity

The method is calculated as follows:

F7 = Af/F*Sm/Af*Ks/M*Dp*1/St*Chm/Ks*O/Chm, where Cm is the average annual cost of machines and machines, Ks number of equipment changes, St m average cost of labor tools, M number machines, Dp duration of the period, Chm number of hours worked by the equipment.

Capital productivity management

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Industrial buildings (workshops, warehouses, laboratories).
Other structures (various engineering and construction facilities that create infrastructure for production, for example, roads and tunnels).
Transmission networks (electric, gas, heat).
Equipment and machines.
Vehicles.
Tool.
Industrial and household equipment.
Draft livestock and perennial plantings.
Other funds (including museum and library values).

Analysis of fixed assets

The study of funds at the disposal of the enterprise is carried out in four directions:

Analysis of the structure of operating systems and the dynamics of their growth or reduction. Its tasks include assessing the size of capital and its structure. At this stage, the nature of the influence of fixed assets on the financial position of the enterprise is also determined.
Analysis of the effectiveness of using the OS. Its tasks are to determine the direction of movement of funds and the time of their useful operation, and calculate integral indicators. At this stage, the calculation of the capital productivity indicator is carried out.
Cost-effectiveness analysis of equipment upgrades. Its tasks include determining the necessary costs for current and major repairs.
Analysis of the effectiveness of investments in the OS. Its task is to assess borrowed loans and their impact on production.

Capital productivity value

This indicator illustrates the ratio of gross profit to fixed assets. Capital productivity characterizes the efficiency of an enterprise. This indicator was used back in Soviet times. Calculation of capital productivity of fixed assets allows you to determine how many products sold are for each unit of cost of non-current assets. In essence, this indicator is on a par with depreciation and profitability of production. Based on these three indicators, we can draw a conclusion about how efficiently the enterprise operates. To begin with, the cost of manufactured products is compared with the volume of fixed assets. The net income is then compared to the required depreciation expense. Calculating the capital productivity of fixed assets allows you to understand whether, in particular, the purchase of new equipment is necessary. If expenses are less than future income, then such an acquisition is profitable.

Calculation of capital productivity

Analysis of the efficiency of using fixed assets is one of the components of competent management. Calculation of capital productivity can be carried out using several formulas. But in principle they all come down to the main thing. The calculation of capital productivity on the balance sheet begins with determining the issue and initial cost of fixed assets. In foreign literature, this indicator is called the turnover ratio. It is used not only to evaluate the effectiveness of OS usage, but also to compare performance within an industry. One such indicator is capital productivity. An example calculation allows you to understand how many products are produced per ruble of fixed assets.

Elements of improving the functioning of an enterprise

The successful operation of the enterprise can be clearly seen from the dynamics of indicators in the analysis of fixed assets. The following factors influence capital productivity:

Equipment structure and maintenance.
The ratio of funds for various purposes.
Favorable market factors.

However, capital productivity does not take into account, for example, changes in the quality of products. Therefore, it is important to pay attention to this indicator separately when calculating.

Factors for increasing the efficiency of using the OS:

Technical re-equipment and reconstruction of existing enterprises.
Changing the structure of fixed assets.
Using newer equipment models to replace outdated ones.
Improving equipment performance by increasing its use and operating time.
Automation of production.
Increasing the number of shifts and eliminating equipment downtime.
Improving the use of newly introduced capacity.

Efficiency

The purpose of the enterprise is commercial gain. To achieve this, any business strives to reduce costs and increase its revenues from its core activities. Therefore, the problem of increasing operational efficiency is central to market relations. The competitiveness of an enterprise depends on the success of its solution. Efficiency is measured by the amount of profit for each ruble of investment. If the cost of purchasing new equipment exceeds expected future income, then this investment is not at all profitable. A clear understanding of the current situation at the enterprise allows you to competently plan the future. The main thing is to neutralize threats from the external environment using your strengths. To do this, the enterprise must identify methods for increasing the productivity of fixed assets. This will reduce production costs and increase gross profit.

Audit as a control check

Any enterprise is a complex economic organism. Therefore, it is difficult to imagine its existence without constant revisions. They can be carried out as separate activities or as components of financial control of activities. The objectives of the OS audit include:

Checking the correctness of documentation of financial transactions.
Determination of the initial cost of fixed assets on the balance sheet.
Checking the correctness of depreciation calculations.
Determination of residual value of fixed assets.
Checking the legality and correctness of business transactions reflected in the accounting records.
Assessing the state of the OS, their safety and performance.

Thus, capital productivity is inextricably linked with productivity. Calculating this indicator allows you to understand the current situation at the enterprise and plan its further development. To correctly determine capital productivity, you must first understand what fixed assets are and what factors influence the increase in their productivity in the production of products.

Red="">Determining the return on fixed assets during the operation of a particular enterprise can be called one of the important methods of analyzing the company’s efficiency. Such calculations must be carried out on an ongoing basis. Otherwise, you may miss the moment when the operation of the enterprise is not effective enough. It is important to understand that each company needs to adjust the calculation formula taking into account the characteristics of its own production and the industry as a whole.

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We described in our article how indicators of the movement of fixed assets are calculated. However, no less important in the analysis of fixed assets is the assessment of the efficiency of their use. The key indicator here is the capital productivity indicator. We will tell you how to calculate it in this material.

How to determine capital productivity

The capital productivity ratio reflects the volume of output per unit of cost of fixed assets. Considering that the main production equipment plays a predominant role in the production of products, it is its value that is usually used as an indicator of the cost of fixed assets. The capital productivity ratio is calculated based on the results of the year or other reporting period. Thus, the formula for determining annual capital productivity (FRO) is as follows:

FO = VP / OPF SG,

where VP is the cost of manufactured products for the year;

OPF SG is the average annual cost of fixed production assets.

The cost of manufactured products often refers to sales revenue. It corresponds to the value reflected in line 2110 “Revenue” of the Statement of Financial Results (Order of the Ministry of Finance dated July 2, 2010 No. 66n).

The average annual cost of fixed production assets (APF SG) is calculated using the formula:

OPF SG = (OPF N + OPF K) / 2,

where OPF N and OPF K are the cost of fixed production assets at the beginning and end of the year, respectively.

Information on the cost of fixed production assets can be obtained from analytical accounting data to account 01 “Fixed Assets” (Order of the Ministry of Finance of the Russian Federation dated October 31, 2000 No. 94n). Both the initial and residual value of fixed production assets can be used in the calculation. Naturally, the analysis must ensure comparability of indicators. This means that when comparing capital productivity indicators over several years, the procedure for calculating the cost of fixed production assets should be the same.

When the volume of output in the formula for calculating capital productivity refers to sales revenue, and not just the cost of manufactured products, the capital productivity indicator is also sometimes called the turnover ratio, or turnover.

The capital productivity ratio is analyzed over time and also compared with industry average values or indicators of counterparties. Naturally, there is no single standard value of the coefficient for all organizations. After all, for example, in capital-intensive industries the need for fixed production assets is higher, and, consequently, the capital productivity ratio will be lower. In general, an increase in the capital productivity indicator indicates an increase in the efficiency of using fixed production assets.

Of course, a change in the capital productivity ratio may be due to factors not directly related to an increase in production output in physical terms or the acquisition (disposal) of fixed production assets. So, for example, an increase in inflation with a constant value of fixed assets usually leads to an increase in the capital productivity ratio. And, for example, the revaluation of fixed assets in the form of their revaluation while the output remains unchanged leads to a decrease in the capital productivity indicator.

The inverse coefficient of capital productivity is an indicator of capital intensity. It reflects the costs of fixed production assets per 1 ruble of output. This means that the formula for annual capital intensity (FE) can be presented as follows:

FO = OPF SG / VP

Since this coefficient is the inverse of capital productivity, its growth indicates a decrease in the level of efficiency in the use of the organization’s fixed production assets.

Any enterprise cannot do without studying the effectiveness of the use of fixed assets. To do this, analysts use an indicator such as capital productivity. The formula for calculating it on the balance sheet allows you to identify negative aspects in the organization of the main factors of production available to the company. Based on the analysis, economists and financiers can draw conclusions about ways to improve the balance sheet structure, which will allow them to receive greater profits in the future period. This is why the calculation of the capital productivity formula is so often used in financial and economic analysis.

Definition

Calculation formula

Capital productivity, the calculation formula for which is presented below, is as follows:

Ф = Sales revenue/Fixed assets

In order to draw correct conclusions based on the data obtained, the indicator of the number of production assets should be taken as the arithmetic average for the reporting period.

F = s. 2110 f. 2/(p. 1150 beginning f. 1 + p. 1150 con. f. 1)/2

In its general principle, the presented indicator is similar to turnover ratios.

Normative value

Capital productivity analysis

Two-factor and four-factor analysis of capital productivity

F2 = Af/F*O/Af, where Af is the active part of production assets, F is fixed assets of production, O is the volume of product sales.

The analysis can also take into account 4 factors - the level of specialization, the power of the company, the structure of production assets and the turnover of active means of production.

F4 = O/Oosn.*Oosn./Med.*Af/F*Med./Af, where Oosn. ‒ the main product of the enterprise, Msred. ‒ average annual capacity of the enterprise.

Seven-factor analysis of capital productivity

The method is calculated as follows: