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productive capacity

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Definition of productive capacity

Productive Capacity Image 1

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



Related Terms:

Economic earnings

The real flow of cash that a firm could pay out forever in the absence of any change in
the firm's productive 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.


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.


Productive Capacity Image 2

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


theoretical capacity

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


Replacement Capital Expenditures

Capital expenditures required to replace productive
capacity consumed during a reporting period.



 

 

 

 

 

 

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