Greif Bros Corporation (GEF)
Fixed asset turnover
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 5,270,000 | 6,333,800 | 5,654,500 | 4,538,400 | 4,583,900 |
| Property, plant and equipment | US$ in thousands | 1,562,600 | 1,455,000 | 1,521,200 | 1,526,900 | 1,690,300 |
| Fixed asset turnover | 3.37 | 4.35 | 3.72 | 2.97 | 2.71 |
October 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $5,270,000K ÷ $1,562,600K
= 3.37
Fixed asset turnover is a financial ratio that measures a company's ability to generate sales from its investment in fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio indicates more efficient utilization of fixed assets to generate sales.
Looking at Greif Inc's fixed asset turnover ratio over the past five years, we see a generally upward trend, indicating improving efficiency in utilizing its fixed assets to generate sales.
In 2019, the fixed asset turnover ratio was 2.72, indicating that Greif Inc generated $2.72 in sales for every dollar invested in fixed assets. Over the next few years, the ratio steadily increased to 4.36 in 2022, suggesting that the company was able to generate $4.36 in sales for every dollar invested in fixed assets. This sharp increase reflects a significant improvement in the efficiency of utilizing fixed assets to generate revenue.
However, in 2023, the fixed asset turnover ratio decreased to 3.34. While this is still an improvement over the 2019 ratio, it represents a slight decline from the peak observed in 2022.
The increase in the fixed asset turnover ratio from 2019 to 2022 may indicate that Greif Inc has been able to increase sales without having to significantly increase its investment in fixed assets. However, the slight decline in 2023 suggests that the company may have either increased its investment in fixed assets without a commensurate increase in sales or experienced a decrease in sales relative to its fixed asset base.
Overall, while the fixed asset turnover ratio has shown some fluctuations, the general trend indicates that Greif Inc has been successfully increasing its efficiency in utilizing fixed assets to generate sales, which is a positive indication of the company's operational performance and asset management.