Texas Pacific Land Trust (TPL)
Fixed asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Revenue | US$ in thousands | 631,595 | 667,422 | 450,958 | 302,554 |
| Property, plant and equipment | US$ in thousands | 89,587 | 85,478 | 79,722 | 79,267 |
| Fixed asset turnover | 7.05 | 7.81 | 5.66 | 3.82 |
December 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $631,595K ÷ $89,587K
= 7.05
The fixed asset turnover ratio measures how efficiently Texas Pacific Land Trust generates revenue from its fixed assets. A higher fixed asset turnover ratio indicates that the company is effectively utilizing its fixed assets to generate sales.
In this case, Texas Pacific Land Trust's fixed asset turnover has been fluctuating over the past four years. It decreased from 3.82 in 2020 to 5.66 in 2021, and then further decreased to 7.81 in 2022, before dropping to 7.05 in 2023.
The decreasing trend in the fixed asset turnover ratio may suggest that the company's efficiency in utilizing its fixed assets to generate revenue has declined over the past two years. This could be due to various factors such as underutilization of assets, changes in the company's business strategy, or an increase in fixed asset investments without a proportionate increase in revenue generation.
Further analysis and comparison with industry benchmarks and competitors' ratios would provide a better understanding of Texas Pacific Land Trust's fixed asset management efficiency and help identify areas for improvement.