capacity

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Capacity

Credit grantors' measurement of a person's ability to repay loans.

Capacity

The theoretical maximum number of products a company can produce at a given time. For example, an oil pump may have a capacity of X barrels per day, meaning that it cannot produce more than X. Companies rarely operate at full capacity, both to allow themselves leeway in the event of increased demand and because capacity may not be possible at a given time because of worker illness, machinery maintenance, or other reasons.

capacity

the maximum amount of output that a firm is physically capable of producing, at a point in time, given the fullest and most efficient use of its existing plant or plants.

Over time, a firm may adjust its capacity to meet changes in demand and the competitive situation facing it, investing in new plant or extending existing plant to meet an increase in demand, or closing down plant, permanently or temporarily (‘MOTHBALLING’), to meet a situation of OVERCAPACITY.

When preparing a PRODUCTION BUDGET, it is necessary to ensure that the firm has sufficient production capacity to meet planned output levels. A firm's capacity or the capacity of industry in general may be limited by the availability of capital equipment and labour.

The maximum rate of output which the firm can produce will depend upon the capacity of its individual factories which in turn depends upon the capacity of various departments and work stations within each factory See INPUT-OUTPUT CONTROL, PRODUCTION SCHEDULING, PRODUCTION-LINE BALANCING. See CAPACITY UTILIZATION, LIMITING FACTOR, RATIONALIZATION, INDIVISIBILITIES, CAPACITY CONSTRAINED RESOURCE, CAPACITY CONTROL, CAPACITY CUSHION, CAPACITY PLANNING, CAPACITY REQUIREMENTS PLANNING.

capacity

  1. 1the maximum amount of output that a firm or industry is physically capable of producing given the fullest and most efficient use of its existing plant. In microeconomic theory, the concept of full capacity is specifically related to the cost structures of firms and industries. Industry output is maximized (i.e. full capacity is attained) when all firms produce at the minimum point on their long-run average total cost curves (see PERFECT COMPETITION). If firms fail to produce at this point, then the result is EXCESS CAPACITY.
  2. in macroeconomics, capacity refers to POTENTIAL GROSS NATIONAL PRODUCT. The percentage relationship of actual output in the economy to capacity (i.e. potential national income) shows capacity utilization. See also MONOPOLISTIC COMPETITION.

capacity

The legal ability of parties to enter into contracts.
• Full capacity. Having unlimited ability to enter into binding contracts of all types.
• Limited capacity. Having the ability to enter into binding contracts for certain things, such as a minor's contracts for necessities, but also having the ability to disaffirm other contracts upon reaching legal age, for example.
• No capacity. Having no ability to enter into contracts, such as one who has been adjudicat- ed as mentally incompetent.

References in periodicals archive ?
However, where "it does violence to the natural instincts of the heart, to the dictates of fatherly affection, to natural justice, to solemn promises, to moral duty, such unexplained inequality and unreasonableness is entitled to great influence in considering the question of testamentary capacity and undue influence.
62) However, the only issue in Witt was whether the decedent possessed testamentary capacity at the time she executed her will, and not whether there was undue influence.
Testamentary capacity requires the testator to be at least eighteen years old and of sound mind.
A person has testamentary capacity if at least fourteen years old and of sound mind.
Surely if there is to be a statutory revocation of a will upon marriage, it should be limited to those cases where a spouse has full testamentary capacity at the time of that marriage.
Not surprisingly, the issue of the capacity required to grant a power of attorney often arises when an individual's testamentary capacity has been questioned because the testator has executed both a power of attorney and a will at or around the same time.
Testamentary capacity is generally presumed upon proof that the will was duly executed with the requisite formalities after having been read over to or by a testator who appeared to understand it.
8) Although the finding of forgery was sufficient to invalidate the alleged will, the trial court went on to find that the decedent lacked testamentary capacity at the time of the alleged execution of the will.
3d DCA 1976), the trial court awarded fees in favor of the attorneys for a proponent and sole beneficiary of a will apparently found to be invalid on grounds of lack of testamentary capacity.
Justice McDonald considered the test for testamentary capacity, as defined in the 1870 case of Banks v.