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Home > QFINANCE Dictionary > Definition of capacity utilization

Definition of

capacity utilization

  • 1. Operations & Production

    measure of equipment actually used for production a measure of the plant and equipment of a company or an industry that is actually being used to produce goods or services. Capacity utilization is usually measured over a specific period of time, for example, the average for a month, or at a given point in time. It can be expressed as a ratio, where utilization = actual output divided by design capacity. This measure is used in both capacity planning and capacity requirements planning processes.

  • 2. Economics

    degree of production capability being used the output of an economy, firm, or plant divided by its output when working at full capacity

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Definitions of ’capacity utilization’ and meaning of ’capacity utilization’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’capacity utilization’ and other financial terms with our online QFINANCE Financial Dictionary.

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