capital labour ratio

capital labour ratio

the proportion of CAPITAL to LABOUR inputs in a company This can be measured by means of a number of accounting ratios. One measure is total assets per pound of employee remuneration: the higher the ratio (the more capital per pound of labour cost), the greater the degree of capital intensity. Alternatively, we could take FIXED ASSETS per employee, or more narrowly plant and machinery per employee, as an index of the degree of mechanization in a firm. Where a company employs a high proportion of part-time workers, numbers employed may need to be adjusted to full-time equivalent numbers to assist comparability. Alternatively, assets may be expressed as a proportion of total employee remuneration.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson