Tuesday, May 13, 2008

Calculate Fixed Asset Turnover Ratio

FAT Ratio Definition

The fixed asset turnover ratio measures how a firm manages its plant and equipment (net fixed assets) to produce sales. When a companies fixed asset turnover ratio is below the industry average, it means the firm has too many fixed assets relative to the sales revenue it generates.

How to Calculate Fixed Asset Turnover Ratio Equation:

Fixed Asset Turnover Ratio = Sales / Net Fixed Assets

Links Accounting and Financial Ratios:

Ratio Analysis and Financial Control
Degree of Financial Leverage
How to Calculate Current and Quick Ratios


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