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Banking Term: ICOR

ICOR is the Ratio of investment to growth which equals to one, divided by the marginal product of Capital.

Feb 10, 2015 14:57 IST
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ICOR stands for Incremental Capital Output Ratio.

ICOR is the Ratio of investment to growth which equals to one, divided by the marginal product of Capital. The higher the ICOR indicates lower the productivity of capital and lower the ICOR reflects high productivity of Capital. ICOR is the topic or instrument by which the Economic growth rate of company decided.

ICOR is calculated as:

ICOR = ­Annual Investment/Annual Increase in GDP

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