Fixed asset turnover ratio

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Fixed asset turnover ratio

The ratio of sales to fixed assets.

Fixed Asset Turnover Ratio

A measure of how efficiently a business generates sales from its investments. That is, it is the ratio of the amount a company earns in sales to the average value of its fixed assets. Fixed assets are investments that cannot easily be converted into cash, e.g. a factory or computer system, and can be quite expensive. Thus, if a company has a high ratio, this means that its sales have kept pace with or exceeded the amount it has invested in fixed assets, which is a positive sign for the company.
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For fixed asset turnover ratios (sales over fixed assets), subsidiary firms had higher ratios than did parent firms, indicating that the fixed assets of subsidiary companies were more productive than those of parent firms.
Other commodity groups which do less processing--such as poultry/livestock cooperatives--have higher fixed asset turnover ratios.