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Ratios: Fixed Asset Turnover definitions Flashcards

Ratios: Fixed Asset Turnover definitions
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  • Fixed Asset Turnover Ratio
    Efficiency metric showing how many dollars of net sales are generated for each dollar invested in fixed assets.
  • Net Sales
    Total revenue from sales after deducting returns, allowances, and discounts.
  • Average Fixed Assets
    Mean value of fixed assets over a period, calculated by adding beginning and ending balances and dividing by two.
  • Beginning Balance
    Value of fixed assets at the start of an accounting period, used in averaging calculations.
  • Ending Balance
    Value of fixed assets at the close of an accounting period, used in averaging calculations.
  • Denominator
    Bottom part of the fixed asset turnover formula, representing average fixed assets.
  • Numerator
    Top part of the fixed asset turnover formula, representing net sales.
  • Efficiency
    Degree to which a company maximizes sales output from its fixed asset investments.
  • Benchmarking
    Process of comparing a company's ratio to competitors or industry averages to assess performance.
  • Industry Average
    Standard ratio value within a specific sector, used for performance comparison.
  • Competitor Comparison
    Assessment of a company's ratio against similar businesses to gauge relative efficiency.
  • Turnover
    Frequency with which assets are used to generate sales within a given period.
  • Fixed Assets
    Long-term tangible resources like buildings or equipment used in business operations.
  • Ratio Analysis
    Evaluation technique using numerical relationships to interpret financial performance.