abhishreshthaa
Abhijeet S
FIXED ASSETS TURNOVER RATIO
This ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with previous period, it indicates whether the investment in fixed assets has been judicious or not.
Objectives:- The objective of calculating this ratio is to determine the efficiency with which the fixed assets are utilized.
Formula:-
Fixed Assets Turnover Ratio = Net Sales x 100
Net Fixed Assets
Significance:-
The firm’s fixed assets turnover ratio should be compared to past and future ratios and also to the ratios of similar firms and the industry average.
Generally a high fixed assets turnover ratio indicate efficient utilization of fixed assets in generating sales, while a low ratio indicates inefficient management and utilisaiton of fixed assets.
This ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with previous period, it indicates whether the investment in fixed assets has been judicious or not.
Objectives:- The objective of calculating this ratio is to determine the efficiency with which the fixed assets are utilized.
Formula:-
Fixed Assets Turnover Ratio = Net Sales x 100
Net Fixed Assets
Significance:-
The firm’s fixed assets turnover ratio should be compared to past and future ratios and also to the ratios of similar firms and the industry average.
Generally a high fixed assets turnover ratio indicate efficient utilization of fixed assets in generating sales, while a low ratio indicates inefficient management and utilisaiton of fixed assets.