The efficiency of the enterprise is one of the most important economic criteria. In its most general form, it can be represented as the ratio of the costs required for the production of products and the result obtained in the course of its implementation.
Instructions
Step 1
The most common indicator of production efficiency is labor productivity, which is defined as the ratio of total revenue to the number of workers employed in production. The growth of labor productivity with the same number of employees indicates an increase in the efficiency of the use of labor resources. The reciprocal of this indicator is labor intensity. It shows how much living labor is used to produce a particular type of product.
Step 2
Another indicator of production efficiency is material consumption. It is calculated as the ratio of production costs (raw materials, materials, fuel, etc.) to the cost of the products injected. This ratio shows how much material resources were required to obtain one monetary unit of revenue. The opposite indicator to this one - material efficiency, reflects the volume of production per one ruble of material costs.
Step 3
Similarly, the following coefficient of production efficiency is calculated - capital intensity and its inverse - capital productivity. Unlike the previous indicator, it reflects the efficiency of the use of the company's fixed assets.
Step 4
Capital intensity is calculated as the ratio of capital invested in production to the value of output. It shows the amount of capital investment required to produce one unit of output.
Step 5
In addition, production efficiency indicators include profitability ratios. The indicator of total profitability is calculated as the ratio of the company's profit to the cost of fixed and circulating assets. Return on sales is determined by dividing profit by the cost of production, and return on equity by the cost of the firm's equity capital.
