Trex Company Inc (TREX)
Fixed asset turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 1,148,820 | 1,091,690 | 1,090,750 | 1,197,010 | 881,886 |
| Property, plant and equipment | US$ in thousands | 922,868 | 709,402 | 589,892 | 460,365 | 336,537 |
| Fixed asset turnover | 1.24 | 1.54 | 1.85 | 2.60 | 2.62 |
December 31, 2024 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $1,148,820K ÷ $922,868K
= 1.24
The fixed asset turnover ratio for Trex Company Inc has exhibited a gradual decline over the period from December 31, 2020, to December 31, 2024. Starting at 2.62 in 2020, the ratio decreased to 2.60 in 2021, then experienced a more significant drop to 1.85 in 2022. This decline continued in subsequent years, with the ratio falling to 1.54 in 2023 and further dropping to 1.24 by the end of 2024.
A decreasing trend in fixed asset turnover ratio generally indicates that the company's efficiency in generating sales from its investment in fixed assets has been diminishing. This may suggest that the company is not effectively utilizing its fixed assets to generate revenue, which could lead to inefficiencies in the production process or underutilization of assets.
A declining fixed asset turnover ratio could also point towards potential issues such as overinvestment in fixed assets, aging or obsolete equipment, or a decrease in sales relative to the investment in fixed assets. It may be important for Trex Company Inc to reassess its asset management strategies and deployment of fixed assets to improve operational efficiency and profitability in the future.
Peer comparison
Dec 31, 2024