What is a fixed -property fluctuation?

The turnover ratio with fixed assets compares the sale of the company with the value of its fixed assets. Theoretically, it shows how well the company uses its solid assets, although it can also indicate whether the company has too many investments tied in fixed assets. There is some debate on how reliable and informative the ratio of turnover with fixed assets is. A common abbreviation for such objects is "property, plant and equipment". In general, it applies to physical assets, that the company would not normally expect to consume or sell or sell in the foreseeable future. In an accounting context, the company would expect to own and use a fixed asset for more than one year. It is important to note that the value of any particular fixed asset will be considered to be a decline every year by depreciation. Of course, this may not change the total value of fixed assets, as older assets may be replaced by newer.

There is a narrow version of the ratio, known as the ratio of tangible assets. This omits the value of any intangible fixed assets such as good customers or brand image on the market. In practice, it may be difficult to evaluate on paper, so they may not be included in the value of a fixed asset in the first place.

The high -fixed ratio ratio can be considered positive for several reasons. This may mean that the company uses especially well and works efficiently. It could also provide some assurance that society does not have too much money tied in solid assets. This may be a problem if the company suffers from a fall in revenue and must sell activates extra cash.

Most companies do not expressly write the ratio of fixed turnover on accounts. However, depending on how detailed accounts are, it may be possible to calculate or estimate the value of fixed assets. This allows analysts to develop the ratio of asset turnover and this will take into account in PSKYetting advice to potential investors. Since the type of fixed assets that are used are extremely different from industry to industry, it is usually effective to perform a direct comparison of the asset turnover between competitors in the same industry.