Calculation formula:
Input-Output Ratio = Total investment / Sum of value added over the life of the project
The larger the value, the better the project economics. Statistical indicators are explained this way:
Gross output is composed of C+V+M, where C is the value of material consumption, V is the value of labor, M is the residual value, and its net output is gross output minus the value of C material consumption, i.e., V+M
Input-Output Ratio = (V+M)/(C+V+M) The heart of the input-output calculations is that for the different types of expenses, their corresponding The core of the input-output calculation is that for different types of expenses, the corresponding market activities, the return is not the same; therefore, different types of expenses have different input-output ratios. By calculating outputs directly from inputs, the efficiency of expenses can be calculated; when the marginal benefit is zero, profits are maximized.
Extended information:
The input-output ratio refers to the ratio of the total investment in a project to the sum of the industrial value added of the output over its operational life. It applies to science and technology projects,? Technological transformation project and equipment renewal project economic effect evaluation index. The smaller its value, indicating that the better the economic effect.
The calculation period of input refers to the construction period (or transformation period) of the project, which is not in doubt. And there are two views on the calculation period of output. One point of view, "output" for the project after the commissioning of the project to reach the normal production of a year or net income; another point of view, "output" should be counted as the project's entire operational life of the sum of the income or net income.
Obviously, the latter concept is consistent with the "input-output ratio" connotation. Because the operational life of different projects are long and short, only one year's income or net income can not indicate the level of its income.
"Input-output ratio" in the "input" refers to all the static investment in the project; "output" refers to the project's full operating life of the sum of the value added in each year. Expressed in the formula is: R = K / IN = 1 / N
The above formula, K for the total investment, IN for the project life of the sum of the years of value added, N = IN / K, the larger the N value, the better the project economics.
In the investment project, science and technology project evaluation indicators, in addition to the net present value, internal rate of return, payback period, rate of return on investment and other well-known indicators, there is also a project management department often use the indicators, which is "input-output ratio".
"Input-output ratio" as an economic effect evaluation index has not been introduced in various economic management works. However, because of its meaning is more intuitive, easy to understand and favored by some investment decision-making institutions and policymakers. Many investment decision-making institutions and policymakers in the use of "input-output ratio", the meaning of which is understood as "the ratio of project input funds and output funds, that is, the project invested in a unit of funds can be output how many units of funds". The number of commonly used "1:N" form of expression, the larger the N value, the better the economic results.
While the input-output ratio is a static indicator, but when the project construction period and operational life after the determination of the input-output ratio and internal rate of return there is a one-to-one relationship, so the benchmark can be based on the benchmark internal rate of return to estimate the benchmark input-output ratio. Benchmark input-output ratio of 1:3, small projects can be slightly lower, larger projects can be slightly higher.
Outputs are tangible material outputs and intangible service outputs provided by producers to the society. Tangible material outputs include foodstuffs, machineries, daily necessities, etc.; intangible service outputs include medical care, information services, financial services, and tourism services.
Outputs are the basis on which a business earns sales revenue. Output is a literary word; the verb means "to produce" and the noun means "the amount of output".
Categorization of output material inputs and outputs, input "hardware" construction, such as the purchase of documentation facilities, e-learning equipment and other outputs of direct economic benefits. Spiritual inputs and outputs, the input of spiritual education, the output of people's social values.
Input-output analysis has undergone a long development process since its introduction. Its development is characterized by:
1) the development of closed-type to open-type, that is, from the residents' consumption as labor reproduction inputs, the residents' income as the output of the labor force, and assumed that there is a linear functional relationship between the two, the development of the intermediate product as an endogenous variable, the investment, the government consumption and residents' consumption or added value as exogenous variables in the model.
②The development from a static model to a dynamic model, i.e., from a model that does not take into account the time factor and treats investment as a column of the final product to a model that moves investment from the right side of the equation to the left side, expands it into a matrix or matrices, and calculates the investment required to increase the value of a unit of output and endogenizes it.
3 from a single input-output model developed into a combination with modern scientific management methods, that is, the combination of input-output modeling and econometric methods, optimal control theory and so on.
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