There might be difference in capital intensity requirements of the industry.
What is Fixed Asset Turnover?
Formula, fixed Assets Turnover Ratio, net Revenue, average Fixed Assets.Average Fixed Assets, opening Balance of Fixed Assets Ending Balance of Fixed Assets 2, example, the following table outlines information required to calculate fixed assets turnover for Facebook, Inc.Has invested in areas that do not increase the capacity of the bottleneck operation, resulting in no additional throughput, the concept of the fixed asset turnover ratio is most useful to an outside observer, who but i love you game wants to know how well a business is employing its.The calculation of ABC's fixed asset turnover ratio is: 9,000,000 Net sales (5,000,000 Gross fixed assets - 2,000,000 Accumulated depreciation).0 Turnover per year, here are several cautions regarding the use of this measurement: Industry specific.Has made a large investment in fixed assets, with a time delay before the new assets start airport tycoon 2 full game generating revenues.
It is used to evaluate the operating performance of a business.
It may be necessary to obtain an average fixed asset figure, if the amount varies significantly over time.
How is the Fixed Assets Turnover Ratio Calculated?Fixed Asset Turnover Ratio Net Sales/Value of Total Fixed Assets.In other industries, such as software development, the fixed asset investment is so meager that the ratio is not of much use.A low ratio indicates that a business: Is overinvested in fixed assets, needs to issue new products to revive its sales.There are a few outside factors that can also contribute to this measurement.As you can see, its a pretty simple equation.Wal-Mart's higher fixed asset turnover ratio might be due to old age (and hence lower book value) of Wal-Mart's assets.Sales over the last 12 months totaled 9,000,000.As you can see, Jeff generates five times more sales than the net book value of his assets.Generally, it is an indicator of operating performance to show how well your business is doing on fixed investments.
A corporate insider has access to more detailed information about the usage of specific fixed assets, and so would be less inclined to employ this ratio.
Heres how the bank would calculate Jeffs turn over.