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expected capacity

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Definition of expected capacity

Expected Capacity Image 1

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



Related Terms:

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.


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 Capacity

Unused production capacity.


Expected future cash flows

Projected future cash flows associated with an asset of decision.


Expected Capacity Image 2

Expected future return

The return that is expected to be earned on an asset in the future. Also called the
expected return.


Expected return

The return expected on a risky asset based on a probability distribution for the possible rates
of return. expected return equals some risk free rate (generally the prevailing U.S. Treasury note or bond rate)
plus a risk premium (the difference between the historic market return, based upon a well diversified index
such as the S&P500 and historic U.S. Treasury bond) multiplied by the assets beta.


Expected Return

The total amount of money (return) an investor anticipates to receive from an investment.


Expected return-beta relationship

Implication of the CAPM that security risk premiums will be
proportional to beta.


Expected return on investment

The return one can expect to earn on an investment. See: capital asset
pricing model.


expected standard

standard set at a level that reflects what
is actually expected to occur in the future period; it anticipates
future waste and inefficiencies and allows for them;
is of limited value for control and performance evaluation purposes


Expected value

The weighted average of a probability distribution.


Expected Value

The value of the possible outcomes of a variable weighted by the
probabilities of each outcome


Expected value of perfect information

The expected value if the future uncertain outcomes could be known
minus the expected value with no additional information.


Expected Capacity Image 3

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


total expected value (for a project)

the sum of the individual cash flows in a probability distribution multiplied by their related probabilities



 

 

 

 

 

 

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