![]() ![]() Fixed Asset TurnoverĪsset turnover refers to a ratio used in relation to the total revenue generated in an organization for every unit of asset used. Also, firms with high fixed asset turnover may still lose money as it is not a representation of healthy cash flow. On the other hand, fixed asset turnover may give a false image in companies with cyclical sales. LimitationsĪsset turnover may not give a true picture in instances where a new large asset is purchased or sold. ![]() On the other hand, fixed asset turnover ascertains if new fixed assets increase sales while also and also determines the efficiency of old fixed assets. ImportanceĪsset turnover helps companies understand how well they can use available assets to generate income, helps in the comparison of companies in the same sector and also highlights internal weaknesses in a company. On the other hand, fixed asset turnover is determined by dividing the net sales revenue by the average net fixed assets. ComputationĪsset turnover is determined by dividing the net sales revenue by the average sum assets. While asset turnover uses all assets, fixed assets turnover uses fixed assets. On the other hand, fixed asset turnover refers to the value of sales in relation to the value of fixed assets, in a company, namely property, plant, and equipment. Both measure the value of sales with relation to assetsĭifferences between Asset Turnover and Fixed Asset Turnover DefinitionĪsset turnover refers to a ratio used in relation to sales generated in an organization for every unit of asset used.Similarities between Asset Turnover and Fixed Asset Turnover For instance, it may five a false image in companies with cyclical sales. The fixed asset turnover, however, has some limitations. ![]() ![]()
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