Fixed assets turnover

Fixed assets turnover is a financial metric that measures how efficiently a company utilizes its fixed assets to generate revenue. Fixed assets typically include property, plant, and equipment (PP&E) that are used in the production of goods and services.

Fixed assets turnover = Total revenue / Two fiscal period average of Net property, plant, and equipment

Two fiscal periods average means the average value between two comparable periods: for example, for years it is the last two years, for half-years it is H1 2024 and H1 2023, for quarters it is Q2 2024 and Q2 2023.

A high ratio can indicate that the company is generating significant revenue relative to its investment in fixed assets, which may lead to higher profitability. Conversely, a low ratio may prompt investors to investigate further, as it could signal potential issues with asset utilization or operational inefficiencies. However, it is important to consider the context of the industry, as capital intensity can vary significantly between sectors.