HOMEPAGE

Fixed Asset Turnover

Definition

Fixed Asset Turnover measures how efficiently a company uses its long‑term assets — primarily property, plant, and equipment (PP&E) — to generate revenue.

$$\text{Fixed Asset Turnover}=\frac{\text{Revenue}}{\text{Average Net Fixed Assets}}$$

Why It Matters

• Critical for asset‑heavy industries (manufacturing, telecom, utilities).
• Shows how well capital investments are being utilized.
• Helps evaluate return on large fixed‑asset bases.

Example

Revenue = $1.5B Average Net Fixed Assets = $500M

$$\text{Fixed Asset Turnover}=\frac{1.5}{0.5}=3$$

The company generates $3 of revenue for every $1 of fixed assets.