Capacity Utilization Rate: Definition, Formula, Uses in Business
Capacity utilization rate is the percentage of a company's or an economy's potential output that is being realized. It is calculated by dividing the actual output by the potential output and multiplying by 100. The rate is used by companies to assess their operating efficiency and provides insight into cost structures. Historically, capacity utilization rates have fluctuated with the business cycle and are published monthly by the Federal Reserve.
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