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

Gathering data-plotting graph-cost estimating relationship, Gather data con...

Gather data concerning the relationship among the dependent and independent variables Collecting data is generally the most hard and time-consuming element of CER development.

What is long term budgets, what is Long term budgets Long term budgets...

what is Long term budgets Long term budgets: The budgets are prepared to depict long term planning of the business. The period of long term begets various between five to ten

Capital budgeting, what is the computation procedure of accounting rate of ...

what is the computation procedure of accounting rate of return?

Accrued expenses, The other source of spontaneous short-term financing is t...

The other source of spontaneous short-term financing is the accrued expenses which arise by the general conduct of business. An accrued expense is an expense which has been incurre

Markov chains, Markov Chains: Markov Chains are named after the Russia...

Markov Chains: Markov Chains are named after the Russian statistician A.A Markov who developed probabilistic models that are often applicable to decision making problems in bu

What are the features of zero base budgeting, What are the Features of zero...

What are the Features of zero base budgeting 1) Manager of a decision unit has to completely justify why there should be at all any budget allotment for his derision unit. This

What are the features of product life cycle costing, Features of product li...

Features of product life cycle costing Product life cycle costing is important due to the following features: 1) product life cycle costing involves tracing of costs and re

What are the 7 feed from control to planning, 7 feed from control to planni...

7 feed from control to planning It is realized these days more than even before that management control is primarily a human activity which should focus on how to help individu

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