Fixed asset turnover (FAT) is an efficiency ratio which measures a company's efficiency in using its fixed assets to generate revenue. Fixed assets are non-current or long-term assets that are tangible and used to generate sales. Examples of fixed assets include land, buildings, plant, equipment, furniture, and vehicles. The formula for calculating the fixed asset turnover ratio is:

Fixed Asset Turnover = Net Sales / Average Fixed Assets

When the FAT ratio is low, it might indicate that the business is underperforming in sales while investing in a large number of fixed assets. On the other hand, it is preferrable for a business to have high FAT ratio because it indicates that the company is efficient in managing fixed assets to generate a return.

Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
Energy Industry Comps Template Energy Industry Comps Template
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
restructuring financial model template preview 1 Restructuring Financial Model Template
This restructuring financial model template is used to demonstrate the financial interactions behind the restructuring process. Adjust this model to…