IMPACT OF CAPACITY UTILIZATION ON PROFITABLITY, A CASE STUDY OF KARAM CERAMICS

Abstract

Profitability is the most important indicator of a company's financial performance since it allows it to seek new possibilities such as growth, which leads to higher profitability, and so on, making a firm ful and relevant in this unpredictable business environment. Ifavailable resources are not success efficiently used to manufacture goods, the manufacturing cost per unit will rise, lowering the organization's gross profits and, as a result, its overall profitability. A corporation with idle production capacity means that excessive investment in machinery and equipment isn't generating any revenue and is lowering the company's potential profit. In order to analyze financial data ofKaram ceramics public limited annual reports ofthe company were extracted, the annual reports were from the year 2015 to 2021.Karam Ceramics Public Limited faces the problem of idle production capacity, which has severely reduced the company's gross profitability. The findings also confirm that there is a negative correlation between capacity utilization rate and manufacturing cost per unit, whereas a positive correlation can be witnessed between gross profitability and capacity utilization rate. In order to monitor capacity utilization rate and reduce idle production capacity utilization, we have created a dashboard using Power BI, which will act as a bridge of information between Karam Ceramics' operation and sales departments. It will allow operations department to increase production of products that are high in demand, therefore increasing the capacity utilization rate and increasing the profitability of company. The dashboard will also enable key members to examine the yearly capacity utilization rate and decide whether to sell part ofthe plant and machinery in order to boost the company's capacity utilization rate and profitability. Furthermore, by monitoring real-time sales data, the dashboard will allow the operations department to determine whether or not to boost production of a newly launched design.