Now, compute the average net fixed assets for the given period based on the opening and closing value of the net fixed assets. Step 2: Next, the value of net fixed assets of the company at the beginning of the period (opening) and at the end of the period (closing). Step 1: Firstly, determine the value of the net sales recognized by the company in its income statement for the given period. The formula for Fixed Asset Turnover Ratio can be calculated by using the following steps: Therefore, Apple Inc.’s fixed asset turnover ratio was 6.61x for the year 2019. Fixed Asset Turnover Ratio = $260,174 million / $39,341 million. Average Net Fixed Assets = $39,341 million.Average Net Fixed Assets = ($41,304 million + $37,378 million) / 2.Calculate Apple Inc.’s fixed assets turnover ratio based on the given information.Īverage Net Fixed Assets = (Opening Net Fixed Assets + Closing Net Fixed Assets) / 2 During the year, the company booked net sales of $260,174 million, while its net fixed assets at the start and end of 2019 stood at $41,304 million and $37,378 million respectively. Let us take Apple Inc.’s example now’s the annual report for the year 2019 and illustrate the computation of the fixed asset turnover ratio. was more effective in the use of its fixed assets during 2019.įixed Asset Turnover Ratio Formula – Example #2 Therefore, XYZ Inc.’s fixed asset turnover ratio is higher than that of ABC Inc. Fixed Asset Turnover Ratio = $70 million / $24 million.Fixed Asset Turnover Ratio = $50 million / $22 million.Average Net Fixed Assets = ($22 million + $26 million) / 2įixed Asset Turnover Ratio is calculated using the formula given belowįixed Asset Turnover Ratio = Net Sales / Average Net Fixed Assets.Average Net Fixed Assets = ($20 million + $24 million) / 2.According to the latest annual reports, the following information is available:Īverage Net Fixed Assets is calculated using the formula given belowĪverage Net Fixed Assets = (Opening Net Fixed Assets + Closing Net Fixed Assets) / 2 Also, calculate which company utilizes its fixed assets better. Calculate the fixed assets turnover ratio of both of those businesses on the basis of the above-given information. Both companies belong to the same industry of ice cream manufacturing. to illustrate the concept of fixed asset turnover ratio. Let us take the example of two companies ABC Inc. You can download this Fixed Asset Turnover Ratio Formula Excel Template here – Fixed Asset Turnover Ratio Formula Excel Template Fixed Asset Turnover Ratio Formula – Example #1
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