ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Regardless of a company’s size or profit margin, the decision to buy new machinery is a significant financial investment that should not be taken lightly. This is especially true today when technology is evolving at such a dramatic pace that it can often be difficult to keep up with updates.

Detailed explanation-2: -Machinery investment ratio is the measure of machinery capitalisation in your business. It indicates what your business has invested into plant and equipment, in comparison with the level of total income generated by the business. Ideally, businesses should be operating at a machinery investment ratio below 0.8 : 1.

Detailed explanation-3: -Increase Efficiencies and Productivity Investing in equipment that enables employees to work faster and reduces manual and repetitive tasks, can increase both efficiencies and overall productivity.

Detailed explanation-4: -Relying on older equipment and expecting increased productivity doesn’t make much sense. To maintain your competitive edge, investing in new equipment is critical. Newer equipment helps you reduce repetitive and manual tasks, which frees up your employees to do other more complicated tasks.