QualityBV Gr 3Y#63
Fixed Asset Turnover is the metric used to how efficiently a company converts capital into earnings.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
(BV_now / BV_3y_ago)^(1/3) - 1
Description
Compound annual growth rate of book value per share over three years. Warren Buffett has long emphasized book value growth as a proxy for intrinsic value growth, especially for asset-heavy businesses. Growing book value means the company is accumulating economic value.
Interpretation
Above 8% is solid. Compare to ROE: high ROE with low book value growth often means the company is returning most earnings to shareholders. Declining book value may indicate losses, excessive dividends, or heavy buybacks above book value.
Related metrics: Return on Equity (ROE), Return on Assets (ROA), Return on Invested Capital (ROIC). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Fixed Asset Turnover- Primary source filings used to calculate Fixed Asset Turnover.
FAQ
How is Fixed Asset Turnover calculated?+
Fixed Asset Turnover uses the formula: (BV_now / BV_3y_ago)^(1/3) - 1. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR 10-K + 10-Q filings (segment-level disclosures).
What is a good Fixed Asset Turnover value by sector?+
There is no single 'good' value for Fixed Asset Turnover — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Fixed Asset Turnover on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Fixed Asset Turnover?+
Charlie Munger, Joel Greenblatt, Terry Smith cite Fixed Asset Turnover as a key input to to find compounders with durable economic moats. The academic anchor is Greenblatt (2005) Magic Formula and Mauboussin (2014). ValueMarkers weights this within the Quality pillar of the VMCI score (30% of total).
What are the limitations of Fixed Asset Turnover?+
Fixed Asset Turnover can mislead in asset-light businesses where conventional capital ratios mislead. Pair Fixed Asset Turnover with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Fixed Asset Turnover data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Fixed Asset Turnover data, sector percentiles, and the VMCI composite score that integrates Fixed Asset Turnover with 119 other indicators across 100,000+ stocks. The free /screener exposes Fixed Asset Turnover as a filterable column.
Used in these guides
Related Quality Indicators
Return on Equity (ROE)Op Margin
Return on Equity measures how efficiently a company converts capital into earnings.
Return on Assets (ROA)Net Margin
Return on Assets is the metric used to how efficiently a company converts capital into earnings.
Return on Invested Capital (ROIC)EBITDA Margin
Return on Invested Capital measures how efficiently a company converts capital into earnings.
Return on Capital Employed (ROCE)FCF Margin
Return on Capital Employed is the metric used to how efficiently a company converts capital into earnings.
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