A crucial thing to know when operating a large equipment business, whether it be rental or construction, is your real time asset utilization ratio. When put very basically, it is what equipment is being used entirely at this very moment. As mentioned, it is essential to running your business and how to best calculate it is below.
In order to properly monitor your real time asset utilization ratio, you need to be able to see everything as a whole. At Baseplan we advise using a software that allows you to view extensive real-time utilization calculations via a wide range of reliable graphs, tables and charts. This will give you the best possible overview of your real time asset utilization ratio.
Your utilization analysis is available through our financial contribution analysis system. This will allow the user to drill down to individual transactions and see ROI and full costs of ownership, such as service costs and depreciation compared to income. These data sets can also be easily exported to Excel if you so choose to use this program to further drill down into this data.
You will also want to keep track of book, tax, and finance depreciation on each asset. Many programs will allow you to split assets can be joined or split as required, one of these includes Baseplan. If you are in need to sell your assets, you will need to factor this into your real time asset utilization ratio calculations, and a program can really help in keeping all of this up to date.
Calculating your real time asset utilization ratio will also require your assets register to integrate with the General Ledger, Equipment Ledger, and Accounts Payable Ledger (in respect to finance leases). You will also want to be able to maintain sub assets, in respect to your software that you use to calculate your real time asset utilization ratio. It is also valuable to be able to put a “hold” on depreciation, especially in equipment that is discontinued and starts to retain value again. On this vein, being able to revalue assets with full audit trails can also be required when doing these calculations.
These are some of things you need to keep in mind when calculating your real time asset utilization ratio, and this is by no means extensive. We highly advise for accuracy that you implement a software to help you with your real time asset utilization ratio, and so much more. Contact us to request a call with a Baseplan Professional today, and let your software do the hard work for you.