Capital productivity measures how well your team is using physical capital to produce goods or services. Physical capital includes human-made items such as labor materials, warehouse supplies, computers, and vehicles. It’s basically anything tangible that you use to make your products.
To calculate capital productivity, you subtract your liabilities (debts and expenses) from your physical capital. You then take that number and divide your sales by it. The result is your capital productivity. The higher the number, the better – that means your tools are letting you sell enough to do well. To increase this number, you can upgrade your physical capital (or get more of it) or decrease your liabilities.