Any manufacturing enterprise that engages in certain business activities needs periodic evaluation of the effectiveness of its financial and economic condition. Depends on how positive the future of the company will be.
Of course, to risk the stability of the development of the enterprise is an unacceptable luxury. For this reason, in any organization that uses production resources, a qualitative analysis of the speed and degree of return on investment is carried out on an ongoing basis.
What is the capital productivity of fixed assets
This indicator is one of the main in the process of evaluating the economic activity of an enterprise. Touching on this topic, initially it is worth paying attention to fixed assets, which can also be called funds. In fact, they can be defined as fixed assets or resources that are invested in the acquisition of fixed assets.
The return of such funds does not occur immediately, this will require several completed production cycles. From which a simple conclusion follows: the more efficient is the use of the resources received, the faster the return on invested finances. Therefore, the analysis of capital productivity of fixed assets is relevant - it cannot be ignored.
Directly in the process of evaluating the activities of enterprises, credit organizations, investors and owners can take part. Moreover, all indicators that are able to characterize the state of fixed assets are taken into account.
We are talking about capital-labor ratio, capital productivity, as well as the profitability and capacity of fixed assets.
Why is this indicator important?
Initially, it should be understood that capital productivity of fixed assets is one of the most effective ways to assess the rate of return of funds invested by investors. This criterion was defined as the main evidence of the successful operation of the enterprise back in the days of the USSR. This approach is easy to explain: this indicator allows you to find out how much for each unit of value of PF finished products are produced, which are subsequently sold. But it is precisely on the level of sales that the influx of financial resources and the return on invested resources depend.
In order to evaluate this indicator, as a rule, the following principle is used: the value of fixed assets is compared with the volume of goods that have already been released by the enterprise.
The capital productivity of fixed assets
If we talk about identifying the coefficient of return on funds, we should focus on the key formula, which can be defined as universal. Its indicators may vary depending on for what purpose the indicator is calculated.
In order to get an extremely objective analysis result, it is necessary to use the same units of measurement in the calculation process. This means that they should not be changed in different comparable periods. The coefficient itself is focused on determining the degree of turnover of non-current assets. It is calculated as the ratio of the sold (released) products of the enterprise to the value of fixed assets.
When the coefficient is determined, the company management can see how many goods were sold per unit of funds invested in public funds. As you can see, to determine the capital productivity of fixed assets is not so difficult. The main thing is to take into account all relevant data in the calculation process.
When identifying the rate of renewal of resources, the essence of the calculation does not change.A similar scheme is used when working with indicators such as receivables, inventory, IBE and any types of assets that are involved in the production process.
Formula
The very scheme by which the capital productivity of fixed assets is calculated is as follows: Fo = Forward / Sof.
In this case, Fo is the total return on assets, Vpr - products released over a certain period, Sof - the value of fixed assets related to production. Such a formula can be successfully used in order to obtain a generalized indicator that will need to be calculated by production units, and to all. If this condition is not met, then it is necessary to concretize the elements of the denominator and numerator.
How to adjust the denominator
Using the formula return on assets calculation, you need to take into account the fact that the denominator indicates the value of fixed assets. In order for the indicator to turn out to be correct in the end, it is necessary to adhere to the following rule: the denominator and numerator should reflect the real data that are used for the calculation.
To determine the value of fixed assets, the following formula is used: OSsr = OSsn + OSk / 2.
It means that book value The OPF recorded at the beginning of the period must be summed up with the data that were obtained at the end of the period. Further, the value that was obtained as a result of such calculations is divided by 2. This is necessary to obtain the arithmetic mean.
This indicator changes if revaluation of funds was carried out. To take into account the structure of fixed assets, you need to take into account only the active assets of the enterprise (those that are involved in the production process). It can be machines, machine tools, equipment and other resources.
How to correctly analyze the indicator
After the coefficient of such an indicator as capital productivity of the active part of fixed assets was obtained, it is necessary to compare this result with similar data that were recorded in other periods. If in the process of such analytics we pay attention to the dynamics of values, then we can determine a decrease or increase in the degree of efficiency of using fixed assets.
In the event that the dynamics is positive, it makes sense to talk about the right approach to operating the OPF. The result of such tactics will be an increase in output and sales.
What affects the return on assets
Various factors may be affected by the level of OPF turnover, which should be paid attention to:
- the performance of the main part of the equipment used to release the goods;
- the volume of production that was sold within a specific period;
- fixed assets structure;
- the level of workload of production lines;
- reduction in the number of shortened work shifts, downtime of machinery and equipment;
- increase in labor productivity and non-current assets;
- technological level of the manufacturing sector.
All these factors can significantly change the rate of return on assets.
How to improve the quality of resource exploitation
For the growth of any enterprise is simply necessary is the high efficiency of fixed assets. Capital productivity can be increased in the event that the quality of operating the OS increases, taking into account current indicators of implementation.
There are several ways you can accomplish this task:
- First of all, you need to organize several work shifts. Such a maneuver will significantly reduce equipment downtime.
- The technical level of the staff is also important - it needs to be improved.This will also affect the reduction of downtime, but already due to the competent use of technology and, as a result, a significant reduction in cases of breakdown.
- Equipment that has been mothballed must be sold. Morally obsolete machines or production lines, the level of physical deterioration of which is high, will have to be written off. As a result, capital productivity of fixed assets will move to a new level of efficiency.
- The allocation of funds for commissioning equipment with a higher technological level can also be called relevant. It is worthwhile to upgrade the existing technical resources.
- Given that such an indicator as capital productivity of fixed assets directly depends on the number of products sold, it makes sense to motivate staff by entering the dependence of the level of wages on the amount of goods produced.
If you use these methods, you can achieve a stable increase in the degree of return on investment.
Conclusion
Determining the return on fixed assets during the operation of a particular enterprise can be called one of the important methods for analyzing the effectiveness of a company. Similar calculations need to be carried out on an ongoing basis. Otherwise, you can miss the moment when the work 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.
Using such calculations, it is possible to maintain the flexibility and practicality of a strategy for managing productive resources.
