Fixed Asset Turnover
Calculate the Fixed Asset Turnover ratio, an efficiency ratio that measures how efficiently a company uses its fixed assets to generate sales.
The Fixed Asset Turnover ratio is calculated by dividing the company’s revenue by its average net property, plant and equipment (PP&E after accumulated depreciation), as defined by the CFA Institute. It indicates how well a company is utilizing its physical capital to generate revenue. A higher ratio suggests more efficient utilization of these assets. Goodwill, intangible assets and long-term investments are left out, so acquisitions do not dilute the ratio. Because net PP&E shrinks as assets depreciate, a company with an old asset base shows a higher ratio than one that has just invested, and leased assets only count when they are capitalised.
The formula is as follows:
\[\text{Fixed Asset Turnover Ratio} = \text{Revenue} / \text{Average Net Property},\;\; \text{Plant and Equipment}\]Also known as: PP&E turnover, fixed asset utilization.
Fixed Asset Turnover in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_fixed_asset_turnover as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["DAL", "UAL", "LUV"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_fixed_asset_turnover()
Or, after setting up the Finance Toolkit MCP, ask:
How much revenue did Delta Air Lines, United Airlines and Southwest Airlines generate per dollar of fixed assets from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| DAL | 0.877 | 1.3299 | 1.4049 | 1.4215 | 1.4046 |
| LUV | 0.9246 | 1.3543 | 1.3266 | 1.3399 | 1.344 |
| UAL | 0.6775 | 1.1979 | 1.3091 | 1.2617 | 1.2002 |
Parameters
get_fixed_asset_turnover accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |