There is no simple answer for this. Having spare capacity is good (generally) if the industry is seeing demand growth, or if this particular company is gaining market share, which means the need for production will go up in the future. If the market is not growing, or if this company is losing market share, having spare capacity is waste of resources. Market demand and market share changes can also move quickly, so what’s an asset today may become a problem area tomorrow. Plus need to consider how the additional capacity was built up… is debt used (interest outgo), if not, were there alternate better uses of available capital etc.
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