If a firm's fixed assets turnover ratio is significantly higher than the average for its industry,then it could be that the firm uses its fixed assets very efficiently or is operating at over capacity and should probably add fixed assets.

Question

Quizplus · Accepted Answer

A high fixed assets turnover ratio indicates that the firm is generating more revenue per dollar of fixed assets than its industry peers, which likely means that the firm is using its fixed assets efficiently. However, if the firm is operating at full capacity and still generating high revenue, it may be prudent to add more fixed assets to sustain growth.

If a Firm's Fixed Assets Turnover Ratio Is Significantly Higher