Wize University Introduction to Financial Accounting Textbook > Long-Term Assets
Fixed Asset Turnover Ratio
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Fixed Asset Turnover Ratio
The fixed asset turnover ratio is a profitability ratio that measures how efficiently a company is using its fixed assets to generate sales.
- Measures how many sales dollars are generated with every $1 of fixed assets.
- High ratio indicates a company is operating its fixed assets more efficiently.
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Example: Fixed Asset Turnover
Compute the fixed asset turnover ratio for the year 2028 assume the company reported net sales of $2,300,000.
Practice: Fixed Asset Turnover
ABC Inc. is concerned that it has become less efficient in using its fixed assets. Using the fixed asset turnover ratio, would you conclude that the company has become more efficient or less efficient in the most recent year?
The company reported net sales of $1,200,000 and $1,050,000 in 2030 and 2029 respectively.
Compute the fixed asset turnover ratio for 2030 and 2029.
Round your final answer to 2 decimal places.