Asset Depreciation Ratio measures the average accumulated depreciation for investments made in Property, Plant And Equipment (PP&E) (calculating the average of beginning and year-end accumulated depreciation).
Unit of measure: MU (Monetary Unit)
Companies or supply chains with a low Asset Depreciation Ratio are desirable. An increase over time can be indicative of a problem: Insufficient cash is generated to replace aging equipment. It's also important to assess the company's value versus a benchmark, since ratios may be indicative of the durability of the assets within an industry.
In order to understand what constitutes good or bad Asset Depreciation Ratio it should always be compared to industry standards and the ratios of other companies that are similar in size.
Accumulated Asset Depreciation: