Capacity utilization rate,
Definition of Capacity utilization rate:
Percentage of the production capacity (of a firm, industry, or industrial sector) actually used for production during a month, quarter, year. Also called operating ratio.
The capacity utilization rate measures the proportion of potential economic output that is actually realized. Displayed as a percentage, the capacity utilization level provides insight into the overall slack that is in an economy or a firm at a given point in time. The formula for finding the rate is:.
(Actual Output / Potential Output ) x 100 = Capacity Utilization Rate.
Meaning of Capacity utilization rate & Capacity utilization rate Definition