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Fixed asset turnover

Fixed asset turnover

Description

Fixed asset turnover is a measure of the productivity that shows how much sales (revenues) are generated for one dollar of fixed assets. Data to calculate this ratio is collected from balance sheet income statement.

Norms and limitations

There are no common norms for the ratio, however the higher value of this ratio is better.

It is recommended to compare this ratio with those of the companies, working within the same industry. Low value might indicate that the company is overinvesting in PP&E. This ratio is mostly used while evaluating capital intensive companies.

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