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AE2

Fixed Asset Turns

The Fixed Asset Turns is a ratio that measures a company's ability to generate net sales from the investments made in Property, Plant And Equipment (PP&E), net of depreciation.

Calculation

Fixed Asset Turns
=
Revenue
Net Fixed Asset Value

where:

  • Revenue = Total annual supply chain revenue
  • Net Fixed Asset Value = Average value of Net Fixed Assets (Gross Fixed Asset - Accumulated depreciation) during the year (= average of beginning and year-end net fixed assets value)

Unit of measure: Number of turns

Importance

A larger number of turns indicates that the company is making more effective use of its existing assets. A lower ratio is an indicator either of low sales or that the business has over-invested in property or equipment that isn't benefiting the bottom line.

In order to understand what constitutes good or bad Fixed Asset Turns this metric should always be compared to industry standards and the ratios of other companies that are similar in size. An equipment-heavy company, such as an industrial equipment manufacturer, has an inherently higher fixed asset total.

Notes

Alternative names for this metric include Return on Fixed Assets, Fixed Asset Turnover Ratio.

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Hierarchy

IDNameLevelx
AEAsset Efficiency0AE
AE2Fixed Asset Turns1AE2
AE21Gross Fixed Assets2AE21
AE22Asset Depreciation Ratio2AE22

Process(es)

IDNameLevelx
PPlan1P
P1Plan Supply Chain Operations2P1

Term(s)

IDNameClearx
PP&EProperty, Plant & EquipmentPP&E
Fixed Asset Turns Asset Efficiency 52000 1 Fixed Asset, Turns, Depreciation The ratio of a company's ability to generate net sales from the investments made in Property, Plant and Equipment (PP&E), net of depreciation.