Valvoline Inc (VVV)
Fixed asset turnover
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 1,440,900 | 1,232,700 | 2,945,000 | 2,375,000 | 2,390,000 |
| Property, plant and equipment | US$ in thousands | 818,300 | 668,600 | 817,000 | 613,000 | 498,000 |
| Fixed asset turnover | 1.76 | 1.84 | 3.60 | 3.87 | 4.80 |
September 30, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $1,440,900K ÷ $818,300K
= 1.76
The fixed asset turnover ratio measures the efficiency of a company's use of its fixed assets to generate sales. A higher ratio indicates better utilization of fixed assets to generate revenue.
Valvoline Inc's fixed asset turnover has been gradually decreasing over the past five years, from 4.80 in 2019 to 1.76 in 2023. This trend suggests a decline in the company's ability to generate sales from its fixed assets. The decrease may be due to factors such as outdated equipment, underutilization of assets, or inefficient production processes.
This declining trend in fixed asset turnover raises concerns about the company's ability to efficiently utilize its fixed assets to generate revenue. Management should consider evaluating the condition and utilization of its fixed assets to identify any inefficiencies and take necessary steps to improve the ratio.
Peer comparison
Sep 30, 2023