Definition of Excess Capacity

Excess Capacity

Unused production capacity.

Capacity

The maximum volume of products or services that can be produced given limitations of space,
people, equipment or financial resources.

capacity

a measure of production volume or some other activity base

Capacity utilization

The proportion of capacity that is able to be utilized to fulfil customer demand for products
or services.

CAPITAL IN EXCESS OF PAR VALUE

What a company collected when it sold stock for more than the par value per share.

Capital in excess par

Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.

Cost Plus Estimated Earnings in Excess of Billings

Revenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts
receivable.

Debt capacity

Ability to borrow. The amount a firm can borrow up to the point where the firm value no
longer increases.

Debt Capacity

An assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources.

Excess Demand

A situation in which demand exceeds supply.

Excess reserves

Any excess of actual reserves above required reserves.

Excess Reserves

Reserves of commercial banks in excess of those they are legally required to hold.

Excess return on the market portfolio

The difference between the return on the market portfolio and the
riskless rate.

Excess returns

Also called abnormal returns, returns in excess of those required by some asset pricing model.

Excess Supply

A situation in which supply exceeds demand.

expected capacity

a short-run concept that represents the
anticipated level of capacity to be used by a firm in the
upcoming period, based on projected product demand

ideal capacity

see theoretical capacity

normal capacity

the long-run (5–10 years) average production
or service volume of a firm; it takes into consideration
cyclical and seasonal fluctuations

practical capacity

the physical production or service volume that a firm could achieve during normal working hours with consideration given to ongoing, expected operating interruptions

productive capacity

the number of total units that could be
produced during a period based on available equipment time
productive processing time the proportion of total time that
is value-added time; also known as manufacturing cycle
efficiency

theoretical capacity

the estimated maximum production or
service volume that a firm could achieve during a period

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