Determine the fixed assets turnover ratio, Managerial Accounting

Assignment Help:

Fixed assets turnover ratio

Meaning: this ratio establishes a relationship among net sales and fixed assets.

Objective: the objective of computing this ratio is to verify the efficiency with which the fixed asset are utilized.

Components: there are two components of this ratio which are as under:

Net sales

Net fixed assets

Note: an advance for purchase of fixed assets is not an operating fixed asset.

Computation: this ratio is computed by dividing the net sales by the net fixed assets. This ratio is usually expressed as x number of time. In the form of a formula this ratio might be expressed.

Interpretation: it shows the firm ability to generation sales per rupee of investment in fixed assets. In general higher the ratio is the more efficient the management and utilization of fixed assets and vice versa. It may be noted that there is no direct relationship among sales and fixed assets since the sales are influenced by other factor as well e.g., quality6 of product delivery terms credit terms after sales service advertisement and publicity etc.

 


Related Discussions:- Determine the fixed assets turnover ratio

Explain about cost centre, Explain about Cost centre: Meaning & defini...

Explain about Cost centre: Meaning & definition: cost centre is defined as a location, person or item of equipment (or group of them) in respect which costs may be ascertaine

Current cost acconting, critically examine the current cost accounting for ...

critically examine the current cost accounting for price level changes

What is the objective of performance budgeting, What is the objective of pe...

What is the objective of performance budgeting The objectives of performance budgets is to provide a closer linkage between planning and action and also to provide a common bas

How would you characterize the politics of food, Given the persistent probl...

Given the persistent problem with starvation in some parts of the world, and the anticipated population growth in developing nations, do we need genetically modified foods? Is it r

Managerial accounting, As an MBA Managerial Accounting Student, John has as...

As an MBA Managerial Accounting Student, John has asked you to evaluate the alternatives available and make recommendations as to the best course of action, and present it in a Rep

The role of computers in simulation, The Role of Computers in Simulation ...

The Role of Computers in Simulation Computers can be used to: 1) To generate the random numbers 2) To simulate thousands of trials. This is done extremely fast, accuratel

Non-zero lead time, Non-zero lead time (determining reorder point) This...

Non-zero lead time (determining reorder point) This basic EOQ model assumes that the suppliers lead time is zero (i.e. goods are delivered immediately on the day the order was

Stock turnover ratio, opening stock 19000 closing stock 21000 sales 200000 ...

opening stock 19000 closing stock 21000 sales 200000 gross profit 25% on sales calculate stock turnover ratio

Transfer pricing, find full-cost& variable cost using transfer pricing meth...

find full-cost& variable cost using transfer pricing method

Innovations of management accounting and control, Implementing management a...

Implementing management accounting and control innovations are often problematic. Provide a brief commentary around the key factors necessary to give such innovations the best chan

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd