Fixed Assets Turnover Ratio

Meaning of Fixed Assets Turnover Ratio 

Fixed assets turnover ratio shows the relationship between net sales and fixed assets. When we divide the net sales with fixed assets and multiply with 100, we find that value net sale which has been possible due to investment of  $ 100 of fixed assets.


Formula of Fixed Asset Turnover Ratio 





Examples : 

1. For example fixed asset turnover ratio is 20%. It means, we have become successful for doing $ 20 sales when we have the different fixed assets like land, building, plant, machinery and computers whose cost is $ 100.

2. For example Walmart company's 2012 sale is $ 443 Billion. Its fixed assets are $ 331 billion. So, its fixed assets turnover is = 443 /331 X 100 = 133%. It means net sales is $ 133 on the invested fixed asset of $ 100.

Important : For calculating net sales, we will deduct sales return from total sales. For calculating fixed assets, we deduct depreciation from book value of fixed assets.

Related : Proprietary Ratio