what is the main downside to the fixed asset turnover ratio 
the fixed asset turnover ratio does not incorporate any company expenses therefore the ratio fails to tell analysts whether or not a company is even profitable a company may be generating record levels of sales and efficiently using their fixed assets however the company may also have record levels of variable administrative or other expenses the fixed asset turnover ratio also doesn t consider cashflow so companies with good fixed asset turnover ratios may also be illiquid the bottom linethe fixed asset turnover ratio is useful in determining whether a company is efficiently using its fixed assets to drive net sales the fixed asset turnover ratio is calculated by dividing net sales by the average balance of fixed assets of a period though the ratio is helpful as a comparative tool over time or against other companies it fails to identify unprofitable companies 