Fixed Assets to Net Worth

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Fixed assets to net worth is a ratio measuring the solvency of a company. This ratio indicates the extent to which the owners' cash is frozen in the form of fixed assets, such as property, plant, and equipment, and the extent to which funds are available for the company's operations (i.e. for working capital).

Calculation (formula)

Fixed assets to Net Worth = Net fixed assets / Net worth

Norms and Limits

Fixed assets to net worth ratio 0.75 or higher is usually undesirable, as it indicates that the firm is vulnerable to unexpected events and changes in the business climate. But the term "fixed assets" (non-GAAP term) has different interpretations so it's difficult to use and compare this ratio. That is why weprefer to use similar ratio "Non-current assets to net worth" implicating IFRS term "Non-current assets".

Quote Fahmy Cader, 28 November, 2012
Could you please define ' net worth' and how it should be measured ?
Quote Vit. A., 28 November, 2012
Quote
Fahmy Cader wrote:
Could you please define ' net worth' and how it should be measured ?
'net worth' - http://www.readyratios.com/reference/accounting/net_worth.html
Quote Guest, 18 November, 2014
Quote
Fahmy Cader wrote:
Could you please define ' net worth' and how it should be measured ?
net worth is capital employed i.e equity share capital+preference share capital+reserves+long term liabilities-fictitious assets

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