Utilization is the action of using something, i.e., making practical and effective use of it. Put simply; the term refers to the use of something or the process of using it effectively. In business, utilization may also refer to the percentage of available time that a machine, device, or employee is actively is working. We can also use the term for a fraction of the available time that a system is operating.
Rather than available time, we can also use the term when looking at available resources. In other words, out of all the machines of one kind that there are, the percentage that are currently in use.
Utilization in healthcare
In healthcare, the term refers to the extent to which a given group uses a particular service.
The figure always refers to a specific period. In healthcare, we typically express utilization as the number of services 100 or 1,000 people use per year.
Etymology of utilization
Etymology is the study of where words come from, i.e., their origin. It also looks at how their structures and meanings have evolved.
The word ‘utilization’ is the noun of the verb ‘utilize.’ The verb and the noun first appeared in the English language in 1794 and 1847 respectively.
The English verb ‘utilize’ came from the French word ‘utilizer,’ which came from the Italian word ‘utillizzare’ and ‘utile,’ which means ‘usable.’
The Italian word came from the Latin word ‘utilis,’ meaning ‘usable.’ ‘Utilis’ came from the Latin word ‘uti,’ meaning ‘make use of, profit by, take advantage of.’
Utilization in engineering
In engineering, the term refers to the period in a device’s life when its quality is realized in practical use. In other words, when people use it, maintain it, repair it, etc.
Subsequently, in engineering, the term may have two meanings:
- For simple things: a process of making use of equipment, a device, or a system.
- For complex things: a stage in a product’s lifecycle.
In Accounting
Utilization, in accounting, measures how efficiently a company uses its assets to generate revenue. In other words, how profitably a company is using its assets.
A business with high asset utilization is using its assets effectively to create more income. This is crucial for evaluating operational efficiency and financial health.
Return on investment or ROI is closely linked to utilization.