Mr. Chen specializes in corporate efficiency, fixed asset depreciation, and financial reporting.
The **Fixed Asset Turnover Ratio Calculator** (FATR) is a key efficiency metric that measures how effectively a company is utilizing its fixed assets (Property, Plant, and Equipment) to generate sales. This four-variable calculator solves for any missing input: **Net Sales (NS)**, **Average Net Fixed Assets (ANFA)**, the **FATR Ratio (R)**, or the implied **Days to Turn Assets (DTA)**. **Input any three of the four core variables** to find the missing one.
Fixed Asset Turnover Ratio Calculator
Fixed Asset Turnover Ratio Formulas
FATR (R) is directly calculated by Net Sales (NS) divided by Average Net Fixed Assets (ANFA). DTA is its inverse relationship based on a 365-day year.
Formula Source: Investopedia: Fixed Asset Turnover Ratio
Variables Explained
The FATR calculation uses the following financial components:
- Net Sales (NS): A company’s revenue from sales after deductions for returns, allowances, and discounts.
- Average Net Fixed Assets (ANFA): The average value of a company’s fixed assets (e.g., land, buildings, equipment) minus accumulated depreciation. Averaging usually uses the beginning and end of the period.
- FATR Ratio (R): The calculated ratio, expressed in “times” (e.g., 4.0 times). A higher number is generally better.
- Days to Turn Assets (DTA): The inverse of the ratio, indicating the number of days it takes for assets to generate sales.
Related Calculators
Explore other key asset utilization and efficiency metrics:
- Total Asset Turnover Ratio Calculator
- Return on Assets Calculator (ROA)
- Degree of Operating Leverage Calculator
- Inventory Turnover Ratio Calculator
What is the Fixed Asset Turnover Ratio (FATR)?
The **Fixed Asset Turnover Ratio (FATR)** is a vital efficiency metric that assesses the efficiency of a business in generating revenue from its long-term, fixed assets. Since fixed assets often represent significant, long-term capital investments, this ratio is particularly important for manufacturing and capital-intensive industries (like utilities or telecommunications).
A **high FATR** indicates that the company is utilizing its existing plant, property, and equipment efficiently to generate a high volume of sales. Conversely, a **low FATR** may suggest over-investment in fixed assets, outdated equipment, or poor sales performance relative to the capital base. Comparing FATR over time and against industry peers is crucial for making capital expenditure decisions.
How to Calculate FATR (Example)
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Identify Components:
A company reports $\mathbf{Net\ Sales\ (NS)}$ of $\mathbf{\$10,000,000}$ and $\mathbf{Average\ Net\ Fixed\ Assets\ (ANFA)}$ of $\mathbf{\$2,500,000}$.
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Apply the FATR Formula:
$$ R = \frac{NS}{ANFA} = \frac{\$10,000,000}{\$2,500,000} $$
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Determine the Ratio:
The result is $\mathbf{4.00}$ times. The company generates \$4.00 in sales for every \$1.00 in fixed assets.
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Calculate Days to Turn Assets (Implied):
$$ DTA = \frac{365}{R} = \frac{365}{4.00} = \mathbf{91.25\ Days} $$
Frequently Asked Questions (FAQ)
A: Generally, yes, as it implies efficient asset utilization. However, a ratio that is too high might signal that the company is delaying necessary capital expenditures, using fully depreciated or older assets, which could affect future competitiveness.
A: Net Fixed Assets (minus accumulated depreciation) is typically used because it represents the fixed assets’ current book value on the balance sheet, which is most relevant for financial ratio analysis.
A: Sales (NS) occur throughout the entire year, while the fixed asset balance changes only periodically. Using the average of the beginning and end fixed asset balances provides a fairer representation of the assets available during the period sales were generated.
A: The Total Asset Turnover Ratio uses *all* assets (current and fixed) in the denominator, while the FATR focuses exclusively on *fixed assets*. FATR is therefore a better measure for capital-intensive industries.