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FINANCE
1. A company has gathered the following financial information for itself and a competing firm. They wish to compare productivity for the two firms
(All numbers in 000s).
Firm A Firm B
Labor $30,000 $16,000
Plant and equipment 200,000 150,000
Energy 17,500 20,500
Materials 200,000 180,000
Sales 1,200,000 900,000
a. Compute partial and total factor productivity measures for Firms A and B.
Solution
Monetary value of production
Total productivity = ----------------------------------------------------------------
Monetary value of all input required for production
Monetary value of production
Partial productivity = ----------------------------------------------------------------
Monetary value of any one input required for production
Particulars Firm A Firm B
Labor $30,000 $16,000
Plant & equipment $200,000 $150,000
Energy $17,500 $20,500
Materials $200,000 $180,000
Sales $1,200,000 $900,000
Monetary value of production $1,200,000 $900,000
Monetary value of all input $247,500 $216,500
Total Productivity 4.84848485 4.15704388
Material Productivity 6 5
Energy Productivity 68.5714286 43.902439
Labor Productivity 40 56.25
Total 114.571429 105.152439
b. What is the picture you get of the two firms?
Solution
The picture that both the firms reveal by this is, that both the firms are performing well and are having huge amount of profits as a result of huge difference between the amount of sale and amount of total productivity.
In this calculation, the total of partial productivity is $114.57 for Firm A and 105.15 for firm B that is not equal to the total productivity of ...
Education
- MBA (IP), International Center for Internationa Business
- BBA, University of Rajasthan
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