capital consumption


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capital consumption

the reduction in a country's CAPITAL STOCK incurred in producing this year's GROSS NATIONAL PRODUCT (GNP). In order to maintain (or increase) next year's GNP, a proportion of new INVESTMENT must be devoted to replacing worn-out and obsolete capital stock. Effectively, capital consumption represents the aggregate of firms’ DEPRECIATION charges for the year.
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We believe Kodak could reduce its capital consumption to at least a 14[cents]-per-$1 investment rate by focusing on achieving operational excellence, and through the judicious use of commercially available information technology.
The path to higher shareholder value
The most striking feature shown on the chart is the growth of capital consumption allowances.
In the first half of 1991, capital consumption allowances and foreign earnings provided most of the internal sources of funds; undistributed profits were minimal.
Research notes: financing plant and equipment expenditures

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