Fixed Assets Ratio


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FIXED ASSETS RATIO: This ratio explains whether the firm has raised adequate long-term funds to meet its fixed assets requirements. It is expressed as follows:

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Fixed assets

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Long – Term funds

 

The ratio should not be more than 1. If it is less than 1, it shows that a part of the working capital has been financed through long-term funds. This is desiarable to some extent because a part of working capital termed as “Core Working Capital” is more or less is a fixed nature. The ideal ratio is 67.

 

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