The fixed asset turnover ratio and the working capital ratio are turnover ratios similar to the asset turnover ratio that are often used to calculate the efficiency of these asset classes. The fixed assets are generally the long-term assets, tangible assets used in a business and they are classified as property, plant, and equipment. Example Sally’s Tech Company is a tech start up company that manufactures a new tablet computer. Fixed asset turnover is the ratio of net sales divided by average fixed assets.This ratio is one of the efficiency ratio used by analysts to determine the overall effective utilization of the resources by a company. Cash, accounts receivable, inventory, prepaid insurance etc are the assets. Essentially, the fixed asset turnover ratio measures the company's effectiveness in generating sales from its investments in plant, property, and equipment.It is especially important for a manufacturing firm that uses a lot of plant and equipment in its operations to calculate this ratio. This ratio indicates the productivity of fixed assets in generating revenues. Fixed Asset Turnover Definition. Differences between Asset Turnover and Fixed Asset Turnover Definition. A fixed asset turnover ratio of 1.71 indicates that the company is generating $1.71 for every $1 of fixed assets. The total asset turnover ratio will be $1,200,000/($700,000 + $1,000,000) = 0.71. Step 1: Find your net sales. Fixed Asset Turnover Ratio Calculator. This ratio tells us how effectively and efficiently a company is using its fixed assets to generate revenues. Examples of fixed assets are production … Asset turnover ratio measures the value of a company’s sales or revenues generated relative to the value of its assets. What’s it: Fixed asset turnover ratio is a financial ratio measuring the productivity and efficiency of fixed assets in generating revenue. How to Calculate Asset Turnover Ratio. The fixed asset turnover ratio is a comparison between net sales and average fixed assets to determine business efficiency. In business, fixed asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets (property, plant and equipment or PP&E, on the balance sheet). It indicates how well the business is using its fixed assets to generate sales. Interpretation. Fixed asset turnover ratio compares the sales revenue a company to its fixed assets. So, you might find that your asset turnover ratio isn’t a totally accurate reflection of your current efficiency. The fixed asset turnover ratio is most useful in a "heavy industry," such as automobile manufacturing, where a large capital investment is required in order to do business. The fixed asset turnover ratio will be $1,200,000/$700,000 = 1.71. Fixed Asset Turnover Definition. To find yours, use this asset ratio turnover formula: Net Sales / Average Total Assets. Financial statement data for the year ending December 31 for Navajo Company follow: Sales $2,550,000 Net income 1,258,000 Fixed assets (net): Beginning of year 800,000 Assets are the owned resources of a company as the result of transactions. The fixed asset turnover ratio is computed as _____ divided by _____. Unlike net income, net sales only take into account expenses that are directly related to the consumers. In other industries, such as software development, the fixed asset investment is so meager that the ratio is not of much use. 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