Simulations Plus Inc (SLP)

Fixed asset turnover

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Revenue	US$ in thousands	74,774	59,577	53,906	46,466	41,589
Property, plant and equipment	US$ in thousands	812	671	632	1,838	438
Fixed asset turnover		92.09	88.79	85.29	25.28	94.95

August 31, 2024 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $74,774K ÷ $812K
= 92.09

The fixed asset turnover ratio for Simulations Plus Inc has shown fluctuating trends over the past five years. In 2024, the ratio reached 92.09, which indicates that the company generated approximately $92.09 in revenue for every $1 invested in fixed assets during that year. This represents an improvement compared to the previous year, where the ratio was 88.79.

The company's ability to utilize its fixed assets efficiently has generally been strong, as evidenced by consistently high fixed asset turnover ratios over the years. In 2020 and 2024, the ratios were notably high, indicating that Simulations Plus Inc has effectively leveraged its fixed assets to generate revenue.

However, there was a significant drop in the fixed asset turnover ratio in 2021, which plummeted to 25.28. This decline suggests a potential inefficiency in utilizing fixed assets to generate sales during that period. It is essential for the company to investigate the reasons behind this sudden drop and take corrective actions to improve asset utilization.

Overall, while Simulations Plus Inc has demonstrated a strong performance in terms of fixed asset turnover in recent years, the fluctuations in the ratio highlight the need for continuous monitoring and strategic management of fixed asset utilization to sustain efficiency and profitability in the long term.