Investment Formula Description
Fixed Assed ratio, sometime referred as Non-Current Asset Ratio, is the formula to measure the fixed asset ratio over the total Asset while total asset includes Fixed Asset and Current Asset.
For more information about Fixed Asset, please refer Fixed Asset Investing Term.It is common that some corporation like properties company, plantation company, construction company, and manufacturing company tends to have high fixed asset ratio because they require construction equipments, lands, properties, manufacturing equipments and factories to operate their business.On the other hands, some corporations like Information technology corporations, Trading Company, Consumer company, and Banking Company will have lower fixed asset ratio because they do not need heavy equipments and lands to operate their business.Fixed Asset Ratio can show the investors how much the corporation depend on Fixed Asset to run their business.
Fixed Asset Ratio = Fixed Asset /Total Asset X 100
Investment Formula Example
If Corporation A has $80,000 of Fixed Asset and $20,000 of Current Asset, Corporation A's Total Asset calculation as following.
Total Asset = Fixed Asset + Current Asset = $80,000 + $20,000 = $100,000
Fixed Asset Ratio for corporation A will be as following.
Fixed Asset Ratio = Fixed Asset / Total Asset X 100 = $80,000 / $100,000 X100 = 80%
In this case, Corporation A has 80% of Fixed Asset over the Total Asset.It also shows that Corporation A is highly depend on Fixed Asset to operate their business.