Capital Intensity

Definition of Capital intensity

The amount of real capital that is used on other factors of production especially on labor is termed as capital intensity. In other words, capital intensity is the practice of measuring a firm’s efficiency in deployment of its assets, calculated as a ratio that how much money is invested to draw one dollar revenue.

Books on Capital intensity

Book 1 –

Capital intensity, absolute size, and growth rate of the small industries sector in India By Jan H. Van der Veen (published by Dept. of Agricultural Economics, Cornell University, 1972)

Book 2 –

Factor Endowment, Structural Coherence, and Economic Growth By Ms. Natasha Xingyuan Che (published by Andrews McMeel Publishing, 2012)

How Capital Intensity works?

Capital intensity is the ratio of the total value of assets to sales revenue that a firm generated within certain period of time. The mathematical equation of capital intensity follows like this,

Capital intensity = Total assets/ sales revenue

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