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Definition of Net Fixed Assets Ratio

Definition: What is Net Fixed Assets Ratio?

Net Fixed Assets Ratio is used to calculate the residual value of the assets. In other words, it tells, how much life of the assets left by comparing the total purchase price with total depreciation amount that has been taken since the assets was purchased.

Definition of Net Fixed Assets Ratio

If the result of the net fixed assets ratio is low it means that the company not replace its assets for a long time and have outdated assets.

Mostly management does not use this ratio. It only examines the equipment of the company because of which management give this responsibility to the maintenance department of the company to check the assets of the company.

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