Fixed Assets Turnover
The fixed-asset turnover ratio is generally used by analysts to measure a company’s operating performance. It is a ratio of net sales to fixed assets. This ratio specifically measures how efficient a company is in generating net sales from fixed-asset investments, namely property, plant and equipment (PP&E), and net of depreciation. In general, a higher fixed-asset turnover ratio indicates that a company has more effectively utilized investment in fixed assets to generate revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets.
It is calculated as: (Revenue ÷ Fixed Assets) x 100.