Fixed Assets to Equity Ratio
The Fixed Assets to Equity Ratio divides a company's non-current assets by its shareholder equity (including paid-in capital and retained earnings generated by the company).
Example:
Buildings $280,000
Land $80,000
Motor van $50,000
Furnitures $15,000
Equipment $25,000
Fixtures and fittings $10,000
Plant and Machinery $30,000
Stocks $70,000
Debtors $60,000
Bank $130,000
Creditors $210,000
Bank loan $90,000
Solution:
Fixed assets = Buildings + Land + Motor van + Furnitures + Equipment + Fixtures and fittings + Plant and Machinery = 280,0000 + 80,000 + 50,000 + 15,000 + 25,000 + 10,000 + 30,000 = $490,000
Current assets = Stocks + Debtors + Bank = 70,000 + 60,000 + 130,000 = $260,000
Total assets = 490,000 + 260,000 = $750,000
Total liabilities = 210,000 + 90,000 = $300,000
Shareholder equity = total assets - total liabilities = 750,000 - 300,000 = $450,000
Fixed Assets to Equity Ratio = 490,000 / 450,000 = 1.09:1
Example:
Buildings $280,000
Land $80,000
Motor van $50,000
Furnitures $15,000
Equipment $25,000
Fixtures and fittings $10,000
Plant and Machinery $30,000
Stocks $70,000
Debtors $60,000
Bank $130,000
Creditors $210,000
Bank loan $90,000
Solution:
Fixed assets = Buildings + Land + Motor van + Furnitures + Equipment + Fixtures and fittings + Plant and Machinery = 280,0000 + 80,000 + 50,000 + 15,000 + 25,000 + 10,000 + 30,000 = $490,000
Current assets = Stocks + Debtors + Bank = 70,000 + 60,000 + 130,000 = $260,000
Total assets = 490,000 + 260,000 = $750,000
Total liabilities = 210,000 + 90,000 = $300,000
Shareholder equity = total assets - total liabilities = 750,000 - 300,000 = $450,000
Fixed Assets to Equity Ratio = 490,000 / 450,000 = 1.09:1