This tutorial covers the most important aspects of the Net Fixed Asset Turnover Ratio. You will learn precisely what Net Asset Turnover Ratio is, its formula, calculating the ratio, and interpreting the results. We’ll also cover how to calculate the Net Fixed Asset Turnover Ratio in excel using the Colgate Case Study. You can download the Colgate Net Fixed Asset Turnover Ratio template from this link – https://www.wallstreetmojo.com/ratio-analysis-template/
What is Net Fixed Asset Turnover Ratio?
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The Net Fixed Asset Turnover Ratio is used to determine a company’s ability to generate sales from fixed assets investments.
Formula
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Net Fixed Asset Turnover Ratio Formula = Net Sales / Average Net Fixed Assets.
Relevance and Uses of Net Fixed Asset Turnover Ratio
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– Creditors and investors can use this ratio to determine how effectively a company uses its machines and equipment to generate sales.
– Creditors might use this ratio to see if the company can generate enough cash flow from newly purchased equipment to pay off the loan used to buy it.
– The company can use this ratio to keep track of how much they have invested in each asset each year and create a pattern to compare year-over-year trends.
For more details, you can refer to our article – https://www.wallstreetmojo.com/fixed-asset-turnover-ratio-formula/
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