How to Calculate Fixed Asset Turnover Ratio?

This shows a company's ability to generate sales from its investment in fixed assets. This KPI is especially relevant for companies that make significant investments into property, plant and equipment (PPE). The higher ratio indicates how effectively those assets are being used; this helps businesses create more output while utilizing less capital than other firms would need with similar levels of production or services offered by them. The formula is: Fixed asset turnover = Total sales / Average fixed assets

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