It is customary to analyze the efficiency of using fixed assets at an enterprise using indicators of return on assets, capital productivity, capital intensity and capital-labor ratio. Fixed assets include buildings, structures, vehicles, machinery and equipment, tools and other fixed assets of the company.
Fund return indicator
The return on assets indicator shows how much profit falls on the ruble of the cost of fixed assets. The analysis uses the total (balance sheet) profit from sales before tax and the average annual balance sheet value of fixed assets. Return on assets is calculated using the company's balance sheet.
Formula: Return on assets to assets = Profit before tax / Average cost of non-current assets * 100%.
Usually the indicator is analyzed in dynamics. The growth in return on assets indicates an increase in the efficiency of the use of funds, a decrease - on the growth of capital expenditures of the enterprise. As a rule, a decline in return on assets is observed when new products are introduced into the assortment or when a new technology is mastered. This is due to the fact that investments in production take time to pay off, thus, the return on assets will grow with the return on investment.
Other indicators of the use of fixed assets
Close to the concept of return on assets is the rate of return on assets. The latter shows how much money in the proceeds from the sale of goods falls on a unit of investment in fixed assets or how much production the company receives from each ruble of fixed assets.
Thus, the difference between these two indicators is in the numerator; when calculating capital productivity, it is revenue, not profit. When calculating the return on assets from the composition of fixed assets, their active part (machinery and equipment) is excluded.
Formula: Return on assets = Volume of marketable output / Average annual cost of fixed assets.
The growth of capital productivity is necessary to increase labor productivity at the enterprise.
Inversely proportional to the return on assets is the capital intensity indicator. It shows how many fixed assets are per ruble of manufactured products or how much money must be spent to obtain the required volume of products.
Formula: Capital intensity = Average amount of fixed assets at initial cost / Volume of products produced.
A decrease in capital intensity indicates labor savings. Thus, with the improvement of the efficiency of the use of fixed assets, the capital productivity increases, and the capital intensity decreases.
The capital-labor ratio, which is used to analyze the degree of labor equipment, has a great influence on the capital intensity and capital productivity. These indicators are linked by the coefficient of labor productivity. The latter is calculated as the ratio of output to the average number of employees. Capital productivity equals labor productivity divided by capital-labor ratio.
For the growth of production efficiency, it is necessary that the outstripping growth of production be ensured in relation to the growth of production assets.
