Fixed asset turnover ratio
Also found in: Acronyms.
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved