Fixed Assets to Current Assets Ratio

Formula:
Fixed Assets to Current Assets Ratio = Fixed Assets / Current Assets

Example:
Calculate the ratio of fixed assets to current assets, given the following information:
Land and buildings $500,000
Motor vehicles $20,000
Furniture $10,000
Office equipment $25,000
Fixtures and fittings $15,000
Machinery $30,000
Stocks $210,000
Debtors $90,000
Bank $55,000
Cash $5,000
Prepaid expenses $40,000

Solution:
Fixed assets = Land and buildings + Motor vehicles + Furniture + Office equipment + Fixtures and fittings + Machinery = 500,000 + 20,000 + 10,000 + 25,000 + 15,000 + 30,000 = $600,000
Current assets = Stocks + Debtors + Bank + Cash + Prepaid expenses = 210,000 + 90,000 + 55,000 + 5,000 + 40,000 = $400,000
Fixed Assets to Current Assets Ratio = 600,000 / 400,000 = 1.5

The ratio of 1.5 : 1 means that there are fixed assets of $1.50 per dollar of current assets.
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