What is load factor method?

The load factor method is a financial metric used to assess the efficiency of a company's asset utilization, particularly in industries like aviation and transportation. It is calculated by dividing the actual output (e.g., passenger miles flown) by the potential output (e.g., available seat miles), expressed as a percentage. A higher load factor indicates better utilization of resources, leading to improved profitability. This method helps businesses optimize capacity and make informed operational decisions.