Fixed And Current Assets Turnover Ratio
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Fixed and current assets turnover ratio
Fixed assets turnover ratio:
It is calculated as: net sales
fixed assets
Components:
Net sales include sales after returns, if any, both cash has well as credit.
Fixed assets include net fixed assets i.e. fixed assets after providing for depreciation.
Indications/precautions:
A high fixed assets turnover ratio indicates the capability of the organisation to achieve maximum sales with the minimum investment in fixed assets. It indicates that the fixed assets are turned over in the form of sales more number of times. As such, higher the fixed assets turnover ratio, better will be the situation.
Net sales include sales after returns, if any, both cash as well as credit.
Current assets include the assets like inventories, sundry debtors, bills receivables, cash in hand or at bank, marketable securities, prepaid expenses and short term loans and advances.
Indications/precautions:
A high current assets turnover ratio indicates the capability of the organisation to achieve maximum sales with the maximum investment in current assets. It indicates that the current assets are turned over in the form of sales more number of times. As such, higher the current assets turnover ratio, better will be the situation.
fixed assets
Components:
Net sales include sales after returns, if any, both cash has well as credit.
Fixed assets include net fixed assets i.e. fixed assets after providing for depreciation.
Indications/precautions:
A high fixed assets turnover ratio indicates the capability of the organisation to achieve maximum sales with the minimum investment in fixed assets. It indicates that the fixed assets are turned over in the form of sales more number of times. As such, higher the fixed assets turnover ratio, better will be the situation.
Current assets turnover ratio:
It is calculated as: net sales
current assets
Net sales include sales after returns, if any, both cash as well as credit.
Current assets include the assets like inventories, sundry debtors, bills receivables, cash in hand or at bank, marketable securities, prepaid expenses and short term loans and advances.
Indications/precautions:
A high current assets turnover ratio indicates the capability of the organisation to achieve maximum sales with the maximum investment in current assets. It indicates that the current assets are turned over in the form of sales more number of times. As such, higher the current assets turnover ratio, better will be the situation.