Dow Inc (DOW)

Fixed asset turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	44,622,000	56,902,000	54,968,000	38,542,000	42,951,000
Property, plant and equipment	US$ in thousands	21,066,000	20,442,000	20,555,000	20,239,000	20,996,000
Fixed asset turnover		2.12	2.78	2.67	1.90	2.05

December 31, 2023 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $44,622,000K ÷ $21,066,000K
= 2.12

The fixed asset turnover ratio measures how efficiently a company generates sales revenue from its investment in fixed assets. It is calculated by dividing net sales by average fixed assets.

Looking at Dow Inc's fixed asset turnover over the past five years, we observe a fluctuating trend. The ratio was 2.12 in 2023, 2.78 in 2022, 2.67 in 2021, 1.90 in 2020, and 2.05 in 2019. This indicates that the company generated $2.12 of sales for every dollar invested in fixed assets in 2023, compared to $2.78 in 2022, $2.67 in 2021, $1.90 in 2020, and $2.05 in 2019.

The decrease in the fixed asset turnover ratio in 2020 could indicate a decline in efficiency in utilizing fixed assets to generate sales revenue. However, the ratio improved in 2021 and 2022, indicating better utilization of fixed assets to generate sales. It then decreased again in 2023.

It's important to note that a higher fixed asset turnover is generally favorable as it signifies that the company is effectively using its fixed assets to generate sales. However, the fluctuations in Dow Inc's fixed asset turnover over the years suggest varying levels of efficiency in this aspect of the company's operations. Further analysis of the reasons behind these fluctuations and their impact on the company's overall performance would provide more insights into the effectiveness of Dow Inc's utilization of its fixed assets.