Ramp Up

AAA

DEFINITION of 'Ramp Up'

A significant increase in the level of output of a company's products or services. A ramp up typically occurs in anticipation of an imminent increase in demand. While it is generally a feature of smaller companies at an early stage of development, a ramp up can also be undertaken by large companies that are rolling out new products or expanding in new geographies.

INVESTOPEDIA EXPLAINS 'Ramp Up'

A ramp up entails substantial outlays of capital expenditures and human resource expenses. For this reason, a company will generally only consider a ramp up once it has a reasonable degree of certainty about additional demand. Otherwise, if the anticipated demand does not materialize or is below projected levels, the company will be saddled with excess inventory and surplus capacity.

RELATED TERMS
  1. Economies Of Scale

    The cost advantage that arises with increased output of a product. ...
  2. Shadow Inventory

    A term that refers to real estate properties that are either ...
  3. Demand

    An economic principle that describes a consumer's desire and ...
  4. Production Possibility Frontier ...

    A curve depicting all maximum output possibilities for two or ...
  5. Market Failure

    An economic term that encompasses a situation where, in any given ...
  6. Market Saturation

    When the amount of product provided in a market has been maximized ...
RELATED FAQS
  1. When is market to market accounting performed?

    Mark to market accounting is used for substantially all investments or financial instruments held on a corporation's balance ... Read Full Answer >>
  2. What types of assets may be considered off balance sheet (OBS)?

    Though the off-balance-sheet accounting method can be used in a number of scenarios, this accounting practice is especially ... Read Full Answer >>
  3. How is abatement cost accounted for on financial statements?

    Abatement costs are accounted for on a company's financial statements through increases in either cost of goods sold or operational ... Read Full Answer >>
  4. What is prime cost in managerial accounting?

    In managerial accounting, prime cost is the sum of direct costs needed to make a product and includes direct materials, direct ... Read Full Answer >>
  5. What is the difference between shareholder equity and net tangible assets?

    Shareholders' equity and net tangible assets are listed in a company's balance sheet and respectively express the company's ... Read Full Answer >>
  6. What are typical examples of capitalized costs within a company?

    Typical examples of capitalized costs are expenses associated with constructing a fixed asset and include materials, sales ... Read Full Answer >>
Related Articles
  1. Economics

    Understanding Supply-Side Economics

    Does the amount of goods and services produced set the pace for economic growth? Here are the arguments.
  2. Investing Basics

    Calculating Unlevered Free Cash Flow

    Unlevered free cash flow (UFCF) is the free cash flow of a business before interest payments.
  3. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  4. Economics

    What are Capital Goods?

    Capital goods are assets with a useful life of more than one year that are used for the production of income.
  5. Economics

    Understanding Capital Assets

    A capital asset is one that a company plans on owning for more than one year, and uses in the production of revenue.
  6. Fundamental Analysis

    What is Year-to-Date?

    Year-to-date (YTD) is a term that describes financial results from the beginning of the current year up to the day the financial number is reported.
  7. Investing Basics

    Explaining Net Tangible Assets

    Net tangible assets is a company’s total assets subtracting both intangible assets (such as goodwill and intellectual property) and total liabilities.
  8. Economics

    What is Managerial Accounting?

    Managerial accounting is internally-based accounting that helps managers measure the results of their decisions.
  9. Investing Basics

    Understanding Long-Term Debt

    Long-term debt is any debt or liability that is due in more than one year.
  10. Economics

    How Do Accountants Use the Equity Method?

    The equity method is an accounting technique used by firms to assess the profits earned by their investments in other companies.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!