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 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

Just-in time inventory management-jit production , Just-in Time (JIT) Inven...

Just-in Time (JIT) Inventory management JIT is a system whose purpose is to generate or to purchase products or components as they are required by customers or for use rather

Motives for conducting cash balances, In this section we have discussed the...

In this section we have discussed the motives for conducting cash balances. In addition, we have discussed cash deficit or surplus situation and how it can be contained by the use

Transfer pricing, Transfer pricing sometimes entails using different transf...

Transfer pricing sometimes entails using different transfer pricing systems: one for tax purposes, and one for internal decision making, even though maintaining two systems can be

Starbucks project, 1) FUTURE CASH FLOWS: Prepare a three (3) year forecast ...

1) FUTURE CASH FLOWS: Prepare a three (3) year forecast of estimated future cash flows for starbucks and give valid economic/business reasons for your projections. This means you w

Working capital decisions, The decisions about long-term investment are dep...

The decisions about long-term investment are depends on judgments on future cash flows, the improbability of such cash flows and the opportunity cost also of the funds to be invest

Assignment, What is the fastest time financial accounting assignment can be...

What is the fastest time financial accounting assignment can be done by your company? It will be a report type format but overview type without going into depth.

Attributes of good information, Attributes of good information 1) Informa...

Attributes of good information 1) Information is anything that is communicated and is sometimes said to be processed data. It is data processed in such a way as to be of meaning

#title.standard cost and variances., Direct materials,4yard at$3.50per yard...

Direct materials,4yard at$3.50per yard...$14.00 Direct labor,1.5direct labor hours at $12.00 per direct labor hour....$18 Variableoverhead,1.5 direct labour hours at $2.00 per dire

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