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Fixed Asset Turnover

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Fixed Asset Turnover (FAT) measures how efficiently a company uses its fixed assets (Property, Plant & Equipment – PPE) to generate revenue. It shows how many times the company “turns over” its fixed assets in a period relative to revenue.

High FAT: Assets are used efficiently; the company generates more revenue per unit of fixed assets.

Low FAT: Fixed assets are underutilized; the company may have invested too much in assets that don’t produce sufficient revenue.

Formula:
Fixed Asset Turnover=Total Revenue/Average Net Fixed Assets


What it tells you:
Indicates asset efficiency in generating sales.
Useful to compare companies within the same industry (because asset intensity varies by sector).
Helps identify whether a company is over-invested in fixed assets or underutilizing them.​

How to use it:
Trend Analysis:
Track FAT over time for the same company to see if asset utilization is improving.
Benchmarking:
Compare FAT against competitors or industry averages.
Investment Decisions:
Higher FAT usually suggests more efficient operations, but context matters (e.g., heavy-capital industries naturally have lower FAT).

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