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By analyzing this ratio, decision-makers can gauge operational efficiency and uncover opportunities for growth.
Keep reading to learn more.
What Is Fixed Asset Turnover?
It highlights how efficiently a company uses its fixed assets to generate revenue.
The FAT ratio is generally used by investors to evaluate businesses in asset-heavy industries likeretail or manufacturing.
But the ratio can varydepending on the industry.
In the manufacturing sector, a high FAT ratio is a must for growth.
Manufacturing companies rely on industrial equipment to increase output, lower costs and grow sales.
The FAT ratio may not be a factor when looking to invest in a bank.
This gives the company a fixed asset turnover ratio of 4.2x for the year.
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