Fixed Asset Turnover Calculator

How it is calculated

The formula is turnover = net revenue ÷ net fixed assets. Net revenue is sales for the period after returns and discounts. Net fixed assets means property, plant and equipment after accumulated depreciation, taken from the balance sheet. Both numbers go in the same currency. The tool also shows the same figure as a dollar amount, meaning sales per one dollar of fixed assets. Revenue may be zero or positive, and fixed assets must be greater than zero, so a company with no fixed assets gives no result. The tool uses the single fixed-asset figure you enter. Many analysts use the average of opening and closing fixed assets instead, so if you want that version, average the two yourself first. A good ratio depends heavily on the industry, so compare only with similar businesses.

Common mistakes

• Using gross fixed assets, before depreciation. The ratio is defined on net assets, and gross figures make the ratio look worse.
• Using total assets or including inventory and receivables. Only long-term physical assets belong here; that is a different ratio called total asset turnover.
• Comparing across industries. A software firm and an airline have very different asset needs, so their ratios are not comparable.
• Mixing a quarter's revenue with year-end assets. Revenue must cover a full year to match the usual interpretation, or the result looks four times too low.
• Forgetting that an old, heavily depreciated asset base inflates the ratio, because net fixed assets shrink as equipment ages.