HP Inc (HPQ)
Fixed asset turnover
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 53,559,000 | 53,718,000 | 62,910,000 | 63,460,000 | 56,639,000 |
| Property, plant and equipment | US$ in thousands | 2,914,000 | 2,827,000 | 2,774,000 | 2,546,000 | 2,627,000 |
| Fixed asset turnover | 18.38 | 19.00 | 22.68 | 24.93 | 21.56 |
October 31, 2024 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $53,559,000K ÷ $2,914,000K
= 18.38
The fixed asset turnover ratio measures how efficiently HP Inc is generating sales revenue from its investment in fixed assets. A higher fixed asset turnover ratio indicates that the company is utilizing its fixed assets more effectively to generate sales.
Based on the trend over the past five years, HP Inc's fixed asset turnover has been declining. In 2020, the ratio was 21.56, which then increased to 24.93 in 2021, showing improved efficiency. However, in the subsequent years, the ratio decreased steadily to 22.68 in 2022, 19.00 in 2023, and further to 18.38 in 2024.
The decreasing trend in fixed asset turnover may suggest inefficiencies in managing and utilizing fixed assets to generate revenue. It could indicate that HP Inc is not effectively utilizing its fixed assets to drive sales, potentially leading to lower profitability or underperformance compared to its industry peers.
HP Inc may need to evaluate its fixed asset management strategies, such as optimizing asset utilization, implementing cost-efficient maintenance practices, or reconsidering investment decisions in fixed assets to improve the efficiency of generating sales revenue. Tracking and addressing the decline in fixed asset turnover ratio could help HP Inc enhance its overall financial performance and competitiveness in the market.
Peer comparison
Oct 31, 2024