Fixed-Asset Turnover Ratio
Fixed Asset Turnover is a ratio of net sales to fixed assets. The turnover ratio measures a the ability to generate net sales from fixed-asset investment such as property, plants and equipment (PP&E) with them being net of depreciation. Usually the higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed assets for each unit of currency of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets. To calculate Fixed Asset Turnover you can use the calculator below to find your ratio.
Fixed Asset Turnover Formula:
Net Sales / Average Net Fixed Assets
AVERAGE NET FIXED ASSETS:
FIXED ASSET TURNOVER RATIO:
Comparing a company's fixed asset turnover ratio with that of its competitors and the industry average will determine if the company is generating sufficient sales from its fixed assets. For more information about turn over ratios please visit: