Fixed Assets Turnover Rate

The fixed assets turnover rate is another activity ratio whereby an income statement financial characteristic is compared to a balance sheet asset section. In this case, comparing adjusted sales against historical cost of fixed assets. This financial business ratio is only effective for business operations that are fixed assets intensive. With service based industries like carpet cleaning, professional firms and medical practices this particular ratio is impractical. It is designed for operations that rely heavily on equipment to account for production and ultimately the corresponding sales. This includes the following industries:

* Shipping (ships, trains, trucking)
* Site Developers
* Crane Operations
* Marinas and Marine Construction
* Real Estate Rentals
* Resorts
* Transportation ( haulers,  taxicabs,  ferries, cruise ships)
* Golf Courses
* Mining and Drilling (oil, water,  natural gas)

Retail and construction are not good candidates for this particular ratio as there is a high reliance on material (inventory) and labor to account for the respective sale.

As with other activity ratios, the higher the value the more leverage

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