What does it do?
The fixed asset turnover ratio measures the amount of sales activity a business is deriving from its investment in fixed assets. This fixed asset turnover ratio calculator works out the value of the ratio based on input values for revenue and opening and closing fixed assets.
The value of the fixed asset turnover ratio will depend on the industry the business operates in. The higher the ratio, the higher the sales activity for a given level of fixed assets, and the higher the earnings are likely to be. Managements job is to ensure that the fixed assets are managed efficiently, and the trend of the ratio is upwards. Further details on this ratio can be found in our fixed asset turnover ratio tutorial.
The fixed asset turnover calculation is carried out using the fixed asset turnover formula by dividing the revenue by the average fixed assets for the period.
Fixed asset turnover ratio = Revenue / Average fixed assets
Revenue sometimes referred to as sales or turnover, is found on the income statement. Fixed assets are found on the balance sheet of the business. The average of the opening and closing fixed asset levels is used to avoid distorting the result.
The Excel fixed asset turnover ratio calculator, available for download below, is used to compute the fixed asset turnover ratio by entering details relating to the revenue and the opening and closing fixed asset levels. The calculator is used as follows:
The revenue is entered. Revenue is found on the income statement of the business. It is sometimes referred to as sales, net sales or turnover.
The opening and closing fixed asset levels are entered. The opening and closing fixed asset levels are found on the balance sheets of the business. The figure used for fixed assets should be net of accumulated depreciation.
The fixed asset turnover ratio calculator works out the average value of the fixed assets during the accounting period, and the fixed asset turnover ratio.
Fixed Asset Turnover Ratio Calculator Download
The fixed asset turnover ratio calculator spreadsheet is available for download in Excel format by following the link below.
There is no correct value for the fixed asset turnover ratio as it depends on the industry in which the business operates. It is useful to compare the calculated figure with other businesses in your industry using figures available from published financial statements.
The fixed asset turnover calculator is one of many financial calculators used in bookkeeping and accounting, discover another at the links below.
Users use this fixed asset turnover calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of an accounting tool that you might use when considering how to calculate fixed asset turnover. It is purely illustrative. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this fixed assets turnover ratio calculator, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.