If average net fixed assets decrease, then the fixed asset turnover ratio will increase, assuming all other things equal.

Question

Quizplus · Accepted Answer

Fixed asset turnover ratio is calculated by dividing net sales by average net fixed assets. If average net fixed assets decrease while net sales remain the same, the ratio will increase because there are fewer fixed assets being used to generate the same amount of sales.

If Average Net Fixed Assets Decrease, Then the Fixed Asset