Fixed Asset Turnover Ratio – Finance | Management Notes

Fixed Asset Turnover Ratio

Fixed Asset Turnover Ratio – Finance |Asset Turnover Ratio | Finance | Management Notes

The fixed asset turnover ratio (FATR)compares net sales to net fixed assets. It is used because to evaluate the ability of management to generate sales from its investment in fixed assets. The FATR is an efficiency ratio that measures company’s return on their investment in property, plant, and equipment by comparing net sales with fixed assets.

Likewise, it calculates how efficiently a company is producing sales with its machines and equipment. First of all it can be calculated by :

FATR formula =Net sales​/Average fixed assets


Net sales=gross sales, less returns and allowances

Average fixed assets=1/2(net fixed assets’ beginning balanceending balance)

Hence, other Related posts:

1. Assets Turnover Ratio

2. Liquidity Ratios

3. Credit Reserve ratio Vs Statutory Liquidity ratio

Similarly You may also like

Careers in Finance

Author: Smirti

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.