Wednesday, March 4, 2015

Fixed-Asset Turnover Ratio

Definition of 'Fixed-Asset Turnover Ratio'
A financial ratio of net sales to fixed assets, The fixed-asset turnover ratio measures company's ability to generate net sales from fixed-asset investments - specifically property, plant & equipment (PP&E) - net of depreciation, A higher fixed-asset turnover ratio shows that company has been more effective în using investment în fixed assets to generate revenues,
The fixed-asset turnover ratio îs calculated as:
                                 
Fixed Assets Turnover Ratio =  Net Sales
                                           -------------------------------
                                           Net Fixed Assets


Expertsmind,com explains 'Fixed-Asset Turnover Ratio'
This ratio îs often used as measure în manufacturing industries, where major purchases are made for PP&E to help increase output, When companies make these large purchases, prudent investors watch this ratio în following years to see how effective investment în fixed assets was,
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