Fixed asset turnover

Fixed asset turnover is similar to asset turnover. It is a narrower measure and measures how effectively sales are generated by fixed asset investments and ignores current assets. It is most likely to be useful in a capital intensive industry. It is:

sales ÷fixed assets

Tangible asset turnover narrows this down further by using only tangible fixed assets. This is reasonable for the same reasons that intangible assets, especially goodwill, are ignored in calculating many valuation ratios. The same end could be achieved with other asset ratios by deducting either goodwill or the total value of all intangible assets from the assets figure.

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