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

Classification of ratio according to significance, Classification of ratio ...

Classification of ratio according to significance   The ratios have also been classified according to their significance. Some ratios are more important than other and the fir

Long run shutdown point, what are the factors should be considered before ...

what are the factors should be considered before terminated the operation of a losing firm??

Corporate Governance., Discuss the dominant compensation philosophy, share ...

Discuss the dominant compensation philosophy, share value creation and the link between company size and executive pay. Solve Parmalat''s case, which may be found in reading No. 8.

Describe the graphic method of break even analysis, Graphic method of break...

Graphic method of break even analysis or break even chart The break even point can also be computed graphically. A break even chart is a graphical representation of marginal co

Capital budgeting – planning investments, Project C would involve a current...

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

CPM @ pert, 2. Draw the network diagram for the following problem and indi...

2. Draw the network diagram for the following problem and indicate a sequence of plans that the company should want to consider in making a time-cost tradeoff. The company is not

Bank guarantees, Bank guarantee is one of the facilities which the commerci...

Bank guarantee is one of the facilities which the commercial banks extend in support of their clients in favour of third parties who will be the beneficiaries of the guarantees. In

State performance budgeting according to carter performance, State performa...

State performance budgeting according to carter performance According to carter performance budgets use statement of mission goals and objectives to explain why the money is be

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