Fixed Assets Turnover

The fixed assets turnover ratio measures the utilization of plan and equipment. It is the ratio of sales to fixed assets:

Fixed assets turnover = Sales
Net fixed assets

This ratio for Jimco in 1993 is

$56,000,000 = 7.286 times
$7,000,000

industry average = 8.36 times

Thus, Jimco has a larger investment in fixed assets relative to its sales volume than is the case for the industry norm.

Total Assets Turnover

The total assets turnover ratio, measures the turnover, or utilization, of all of the firm's assets. It is calculated as follows:

Total assets turnover = Sales
total assets

The value of Jimco's total assets turnover in 1993 is

$51,000,000 = 1.645 times
$31,000,000

industry average = 2.95 times

This ratio indicates that compared with other firms in its industry, Jimco's management has efficiently utilized its resources in generating sales.


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Finance For Strategic Management
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