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Fixed Assets Test
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

One of the general tests applied in analyzing the investment position of securities.  The depreciated value of fixed assets (land, buildings, equipment, etc.) should normally be substantially in excess of the funded debt outstanding.  Even the railroads, which are allegedly overcapitalized, compare favorably on this test.  Net unmatured funded debt of railroads totals about 30% of investment in road and equipment, which means there is over $3.30 invested in road and equipment for every dollar of funded debt.

This test is also computed on the basis of total capitalization (funded debt and capital stock) to the net depreciated value of fixed assets.

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