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Definition of Fixed Asset Turnover Ratio

Definition: What is Fixed Asset Turnover Ratio?

Fixed Asset Turnover Ratio is the efficiency ratio which measures the efficiency of the company to produce sales with its equipment and machinery.

Definition of Fixed Asset Turnover Ratio

Investors and creditors give this ratio importance because through this they analyze that, how efficiently the company uses its equipment for generating the sales.

Investors calculate the return on their investment by using this ratio. Creditors use this ratio to measure the revenue from the equipment which the company buys on loan.

Management does not use this ratio usually because this ratio gives the internal information while the company’s management needs the internal and external both information and return on the investment.

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