Also, it's best to compare the turnover ratios with similar companies within the same industry. Ideally, investors should look for improving turnover rates over multiple periods. It's important for investors to compare the fixed asset turnover rates over several periods since companies will likely upgrade and add new equipment over time. The higher the number of times PP&E turns over, the more revenue or net sales a company's generating with those assets. This metric enables comparisons of leverage to be made across different companies. The ratio is a measure of the productivity of a company's fixed assets with respect to generating revenue. Total debt to total assets is a leverage ratio that defines the total amount of debt relative to assets. The fixed asset turnover ratio can tell investors how effectively a company's management is using its assets. Description: Asset turnover ratio can be calculated by considering the average of the assets held by a company at the beginning of the year and at the end of a. Some industries use net sales since they have returned merchandise, such as clothing retail stores.
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