Don't Overlook the Cost of Capital Invested in Your Fleet

摘要

Owning costs are made up of several different cost categories. Some, like licenses, insurances and property tax, are well understood. You incur these costs on a monthly or annual basis and you must recover enough with your equipment rates to pay for the actual costs incurred. The same is true tor repaying a loan or meeting a lease commitment. You will be billed for these costs and your cost-recovery rate for the period of the loan or lease must ensure that you can meet those expenditures. Depreciation is certainly a cost even though you never get a bill for it, and your owning-cost recovery rate needs to recover the loss in value experienced as the machine ages. Return on equity―the return on capital you have invested in the machine―is a similar reality.