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

What is the scope of waste heat boilers, What is the Scope of Waste heat bo...

What is the Scope of Waste heat boilers This specification covers the minimum requirements for the design, material selections, fabrication, testing and inspection of shop- / o

State the debtors turnover ratio, Debtors turnover ratio( or receivables tu...

Debtors turnover ratio( or receivables turnover ratio) Meaning: this ratio establishes a relation ship between net credit sales and averages trade debtors.   Objective

Cost concepts and estimations, in the past,the company had difficulties sep...

in the past,the company had difficulties separating semi-variable costs between varible and fixed costs.the company''s varible cost per unit consists of the cost of patrol,maintena

Homework.., Give the following cost data Costs /per unit labor … $ 4 Mate...

Give the following cost data Costs /per unit labor … $ 4 Materials …5 Fixed cost … $ 12000 Determine the break even point in units if the selling price is $ 19.00 Determine th

Strengths and weakness of net book value and paybac, Strengths and weaknes...

Strengths and weakness of net book value and pay back method

Compute the expected return and risk of a portfolio, Compute the Expected R...

Compute the Expected Return and Risk of a Portfolio? The subsequent data are presented to you as a portfolio manager Security Expected Return

Determine the phases of product life cycle, Phases of product life cycle ...

Phases of product life cycle The life cycle of a product having of four phases viz., introduction growth maturity decline during introduction phase a product is launched into

Pricing over the life cycle of a product, Q. Pricing over the life cycle of...

Q. Pricing over the life cycle of a product? The cycle begins with the invention of the new product. The innovation of a new product and its degeneration to a common product is

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