Definition of Accumulated Depreciation to Fixed Assets Ratio

Definition:

Accumulated Depreciation to Fixed Assets Ratio is the financial measurement. It is used to calculate the age, value and remaining life of the fixed assets of the company on the company’s balance sheet by comparing the total depreciation amount on these assets with total carrying cost.

Definition of Accumulated Depreciation to Fixed Assets Ratio

For the representation of the lost values on the fixed assets which are ages and become fewer price assets, accumulated depreciation is used.

For the measurement of the remaining usefulness of the assets, the company compares the total amount of a company used its assets by the total value of the assets.

Machinery and other equipment which company use for making the product or for other services are the fixed assets of the company.

If the ratio is high then the fixed assets remaining life is less and need to remove the fixed assets of the company. If the ratio is low then fixed assets may be used for many years.

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Updated: November 21, 2019 — 6:36 pm

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