Formula

Fixed Asset Ratio = Fixed Asset /Total Asset X 100

Description

Fixed Asset is a long-term, tangible asset held for business use which is not expected to be sold for cash in the current or upcoming fiscal year, such as manufacturing equipment, real estate, and furniture.Fixed Assed ratio is used to measure the fixed asset ratio over the total Asset.Some companies like construction company, plantation company, properties company and manufacturing company are tends to have high fixed asset ratio because they require construction equipment, land, property and manufacturing equipment and factory to run their business.On the other hand, some company like Information technology company, Consumer company, Trading Company, and Banking Company will not have so high fixed asset ratio because they depend on Current Asset more than Fixed Asset.Fixed Asset Ratio can show you how much the company depend on Fixed Asset to run their business.

Example

If Company A has $70,000 of Fixed Asset and $30,000 of Current Asset, it means that Company A has total Asset as following -  Total Asset = Fixed Asset + Current Asset = $70,000 + $30,000 = $100,000. The Fixed Asset Ratio for company A will be as following - Fixed Asset Ratio = Fixed Asset / Total Asset X 100 = $70,000 / $100,000 X100 = 70%. In this case, Company A has 70% of Fixed Asset over the Total Asset.It also show that Company A is highly depend on Fixed Asset to run their business.

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