Fixed Asset %

Fixed Asset %

Total Fixed Assets ÷ Total Assets (x100)

Benchmark: 45% to 55%

Description:

The primary function of this KPI is to measure the balance between the investment in the facility of the company (land and building etc.) and the investment in the day-to-day business that operates within it. In other words, it assesses the balance between long-term and short-term investment.

This example below shows that of all the money that has been spent in your dealership, 48% of the investment is in the facility, and the remaining 52% is invested in stock and all the other things from which you hope to earn profit.

The calculation is taken from the Balance Sheet and is generally shown within the company summary.

Example:

A) Total Fixed Assets = R2,564,478
B) Total assets = R5,342,663
C) Fixed Asset % = 48% (A ÷ B X 100)

Discussion:

The reason for the 10% tolerance in the benchmark is because of the fluctuation in property prices around the country. Therefore an area with high property prices would generate a higher Fixed Asset %.

This KPI is only really valid when the land and buildings are shown on the Balance Sheet.

Related Terminology:

» Motor Retail Terminology and Concepts