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Fixed Asset Turnover Calculator

Measure how efficiently a company uses fixed assets to generate sales. Includes 3-year historical trend analysis.

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Category Financial Ratios

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About

The Fixed Asset Turnover Ratio is a critical solvency and efficiency metric used by financial analysts to evaluate how well a company utilizes its property, plant, and equipment (PP&E) to generate revenue. A high ratio generally indicates efficient asset management, whereas a low ratio may suggest over-investment in fixed assets or under-performance in sales. This tool is particularly useful for capital-intensive industries like manufacturing and telecommunications. It includes a multi-year input feature, allowing users to track the ratio's trajectory over time, which is often more valuable than a single snapshot.

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Formulas

The ratio compares Net Sales to Net Fixed Assets:

FAT = Net SalesAverage Net Fixed Assets

Average Net Fixed Assets is calculated as:

Avg Assets = Assetsbegin + Assetsend2

Reference Data

Ratio ValueInterpretationStrategic Implication
High (> Industry Avg)Efficient UsageCompany generates high sales with minimal investment. Check if assets are old/fully depreciated.
Low (< Industry Avg)Inefficient UsageCompany may have excess capacity, bottleneck issues, or recently invested heavily in new plants.
Declining TrendWorsening EfficiencySales are not keeping pace with asset accumulation. Management review needed.
Rising TrendImproving EfficiencyNew investments are paying off, or the company is divesting unproductive assets.

Frequently Asked Questions

Fixed assets refer to long-term tangible assets like buildings, machinery, vehicles, and land. Intangible assets and current assets (cash, inventory) are excluded.
Net Fixed Assets accounts for accumulated depreciation. This provides a truer picture of the current book value of the assets actually contributing to production.
Not necessarily. An extremely high ratio might mean the company is operating with old, fully depreciated equipment that may soon need expensive replacement (CAPEX cliff).
Ending assets are found on the current year's balance sheet. Beginning assets are simply the Ending assets from the previous year's balance sheet.