Annals of the University of Petrosani: Economics (Jan 2010)
THE DISCLOSURE OF THE CONVERSION OF VOLUME AND UTILIZATION OF FIXED CAPITAL IN THE COMMERCIAL RATE OF RETURN
Abstract
The efficiency and sustainability in a competitive economy are provided also by the extent to which the company has a material potential whose technical and operational parameters meet the new requirements of market economy. The management of creating value at the enterprise level requires selecting from a range of alternative investments that variant that incubated the most likely probability to increase the value of the firm. The fixed capital of the company is a production factor with a significant role in the performances of economic efficiency of it. The fixed capital incorporates a certain qualitative level of the production tehnologies and its effectiveness will depend decisively on the degree of physical and moral wear and also by the degree to which production capacity is used. At company level, economic efficiency is called return and, if the ratio between effect and effort is expressed as a percentage, is called rate of return. The key element of a company's profitability is the profit which, in its various forms, is taken into account in determining the different rates of return. The objective of any enterprise is to achieve maximum benefit and profitability of capital invested with the view to ensure its development and compensation of those who made capital investments. The profitability is one of the synthetic forms of expressing the efficiency of the entire financial-economic activities of the enterprise, respectively of all the means of production used and labor force, in all stages of economic circuit: supply, production and sales.
