Description
FRReturnOnNetFixedAssets returns the ratio between NetProfit and NetFixedAssets.
Format
FRReturnOnNetFixedAssets(NetProfit, NetFixedAssets)
Arguments
NetProfit is a Number or formula. NetProfit is the amount of earnings a company earns during the year from the sale of its products or services minus all the expense items. It is the bottom line figure in a company's income statement. Some analysts may want to use the net profit before extraordinary items and/or income taxes for calculating this ratio.
NetFixedAssets is a Number or formula. NetFixedAssets equals total fixed assets minus accumulated depreciation in a company's balance sheet.
Action
FRReturnOnNetFixedAssets returns the ratio between NetProfit and NetFixedAssets (for example, ReturnOnNetFixedAssets = NetProfit / NetFixedAssets).
Typical uses
This ratio is used to measure the return on capital assets employed. This ratio is normally used for measuring the efficiency of manufacturing companies or servicing industries that required employment of capital assets to provide its services (airlines, and so on). The higher the ratio the better the return.
Examples
FRReturnOnNetFixedAssets(34, 50)
Returns 0.68.
FRReturnOnNetFixedAssets(50.4, 42
Returns 1.2.
None of the arguments can be negative; you may have to check for negative values before passing the arguments.
Comments
FRReturnOnNetFixedAssets is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. They can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.
Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.