Fixed assets Turnover Ratio: In manufacturing firms, production activities and quantity of sales depend on fixed assets.

So, to know whether fixed assets in the firm are used efficiently and properly or not fixed assets turnover ratio is used. The formula is as given below:

Fixed assets Turnover Ratio: Cost of goods sold/Net fixed asset

Cost of Goods Sold: The calculation method of cost of goods sold has been given in the stock turnover ratio.

Net Fixed Assets: Net fixed Assets can be calculated by using the following formula:

Significance: If this ratio is high it is considered good for the business. This also shows that the fixed assets of the organization are being properly utilized.

• On the contrary, if this ratio is low, then it indicates improper and inefficient use of fixed assets and faulty investment in such assets.
• For Financial Analysis of manufacturing organizations, this ratio is of paramount importance.