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Fixed assets turnover ratio formula8/16/2023 How AR Automation Can Helpīusinesses should use fixed asset turnover in conjunction with other KPIs and financial statement analysis to get a complete picture of the company. As a result, the FAT ratio can provide insights that the NAT cannot, but the net asset paints a more accurate picture of total business performance. The fixed asset turnover is a more specific metric than the NAT because it only includes fixed assets in the calculation. Company XYZ’s NAT would be $100 ÷ $50 or 2. It measures how efficiently a company uses its total assets to generate revenue.įor example, assume Company XYZ has $100 in sales and $50 in total assets. The net asset turnover or NAT is similar to the fixed asset turnover, but it expands its reach. These intangible assets can be significant sources of revenue for some companies. The FAT ratio does not consider intangibles such as patents or goodwill. Still, if the assets are not generating enough revenue, the company is not performing well. A company could have a high FAT ratio because it sells its assets quickly.
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