Fixed Asset Turnover – The bigger the numerical ratio the better.
This is one of the Efficiency Ratios in which the more efficient a company uses its resources, the more profitable a company is.
Calculate this ratio using the below equation. Values in the equation can be acquired from the Balance Sheet (with the exception of “Sales” which is found in the Income Statement).
Equation:
Fixed Asset Turnover = (Sales) ÷ (Fixed Assets)
Equation results indicate how many “sales” dollars are generate per dollar invested in fixed assets (plant & equipment).