Powell Industries Inc (POWL)
Fixed asset turnover
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 1,399,130 | 1,065,850 | 941,620 | 1,037,320 | 1,034,130 |
| Property, plant and equipment | US$ in thousands | 97,625 | 98,628 | 109,457 | 114,372 | 120,812 |
| Fixed asset turnover | 14.33 | 10.81 | 8.60 | 9.07 | 8.56 |
September 30, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $1,399,130K ÷ $97,625K
= 14.33
The fixed asset turnover ratio measures a company's ability to generate sales from its investment in fixed assets, such as property, plant, and equipment (PP&E). A higher fixed asset turnover ratio indicates more efficient utilization of fixed assets to generate sales.
Based on the data provided for Powell Industries, Inc., the fixed asset turnover ratio has been steadily increasing over the past five years. In September 2023, the ratio stands at 7.16, indicating a significant improvement from 5.40 in September 2022, 4.30 in September 2021, 4.53 in September 2020, and 4.28 in September 2019.
The trend of increasing fixed asset turnover reflects that Powell Industries has been effectively utilizing its fixed assets to generate sales. This suggests that the company has been successful in optimizing the use of its property, plant, and equipment to drive revenue and achieve higher sales productivity.
It is important to note that a high fixed asset turnover ratio may also reflect potential risks, such as aging or obsolete assets or overcapacity. Therefore, it would be essential for Powell Industries to ensure that the increase in the ratio is not solely due to asset reduction or impairment, but rather due to improved operational efficiency and effective management of fixed assets.
In conclusion, the upward trend in Powell Industries' fixed asset turnover ratio from 2019 to 2023 indicates improved efficiency in utilizing its fixed assets to generate sales, which is a positive sign for the company's operational performance and potential for revenue generation.
Peer comparison
Sep 30, 2023