Calculation formula for capital utilization rate: capital utilization rate = total invested capital ÷ total fixed assets.
Capital Utilization Ratio is the ratio of the total amount of capital invested in fixed assets (such as plant, machinery, equipment, etc.) to the total amount of fixed assets invested by a company or an individual.
The capital employed ratio is usually calculated using the following formula: capital employed ratio = total invested capital ÷ total fixed assets. When calculating the capital employed ratio, the total amount of capital invested by the company or individual needs to be added to the fees that may be required for other investment projects, including interest, taxes, and maintenance and repair costs.
The working capital occupancy rate is the average amount of working capital occupied per hundred dollars of merchandise sales in a given period. The ratio between the average amount of working capital occupied and the value of production and sales revenue achieved.
Liquidity occupancy rate (production value of funds) and liquidity turnover (capital production rate, turnover times) is inversely proportional. The utilization effect reflected in the working capital occupancy rate is due to the completion of each hundred yuan of output value required to reduce the working capital, thus directly reflecting the relationship between increased production and savings and its economic effects.
It shows that an important way to solve the contradiction between the development of production and capital requirements is to fully mobilize internal resources, practice economy, tap the potential of capital, and strive to increase production without increasing capital or increase production less capital. This is a correct and effective way to continuously expand reproduction.
This indicator can be complementary with the turnover rate indicators, especially in the development of fixed liquidity occupancy indicators, more practical value. Because of its simplicity, in practice, has been widely used.
The basic concept of the capital employed ratio is that since funds are used to invest in fixed assets and other costs (such as interest) also cost money, these costs must be taken into account.
With the concept of capital employed ratio, a business can follow it to calculate the most efficient way to use the capital so as to maximize the return on investment. When investors and business managers are prudent in their use of capital, calculating the capital employed ratio can save money and ensure that the business realizes maximum returns.