What are the ratios which can be used to determine how Capital Intensive an industry is?? I am thinking of Capex/Depr… Somebody said Capex/EBIDTA… Pls help me to understand this concept.
ROA. You can calculate on fixed assets or total assets.
A capital intensive industry have low return per unit of assets.
I’d say Fixed TO should be low for capital-intensive businesses. ROA is affected by profitability, so FATO would be a ‘truer’ measure.
Capital Intensity Ratio = Total Assets / Sales
http://www.wisegeek.com/what-is-a-capital-intensity-ratio.htm
= 1 / Asset Turnover.