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Increasing returns to scale

Increasing returns to scale – An increased return to scale occurs when production is greater than the past due well-organized operational practices, and when the cost per element of assembly is reduced.  Increasing returns to scale is otherwise known as economies of scale or decreasing costs.  This term is best explained through a quick example. Say a production line increases the amount of parts it uses (oftentimes referred to as “inputs”) by 4 times.  An increased return to scale would occur when more than four times of the original products are created, also known as “outputs” from these parts.

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Definition of the Day Coverage Ratio

Coverage Ratio - the term coverage ratio is a type of accounting tool that helps measure a company’s ability to survive and grow.  Simply by comparing the company’s assets (gross profits) and liabilities (expenses) are a form of figuring the coverage ratio. The higher the assets, and the lower...

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