Simulations Plus Inc (SLP)

Fixed asset turnover

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Revenue	US$ in thousands	59,577	53,906	46,466	41,589	33,970
Property, plant and equipment	US$ in thousands	671	632	1,838	438	341
Fixed asset turnover		88.79	85.29	25.28	94.95	99.62

August 31, 2023 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $59,577K ÷ $671K
= 88.79

The fixed asset turnover ratio measures a company's ability to generate sales revenue from its investment in fixed assets. A higher ratio indicates that the company is using its fixed assets more efficiently to generate sales.

In the case of Simulations Plus Inc., the fixed asset turnover ratio has shown fluctuating trends over the past five years. In 2023, the ratio stands at 88.79, indicating that the company generated $88.79 in sales for every dollar invested in fixed assets. This represents a significant increase from the previous year, which stood at 85.29.

The 2023 ratio also marks a substantial improvement from the 2021 figure of 25.28, suggesting that the company has significantly improved its utilization of fixed assets to generate sales. The 2023 ratio also outperforms the figures for 2020 and 2019, which were 94.95 and 99.62, respectively.

This upward trend in the fixed asset turnover ratio reflects positively on Simulations Plus Inc.'s efficiency in utilizing its fixed assets to drive sales, indicating potential improvements in operational efficiency and asset utilization. However, it is important to conduct further analysis to understand the underlying factors driving this trend and its potential impact on the company's overall financial performance.