Question

A company had net cash flows from operations of $120,000, total cash flows of $500,000, and average total assets of $2,500,000.
The cash flow on total assets ratio equals:

a) 4.8%. b) 5.0%. c) 20.0%. d) 20.8%. e) 24.0%.

Answer 1

Answer:

cash flow on total assets ratio = 4.8 %

so correct option is a) 4.8%

Explanation:

given data

net cash flows = $120,000

total cash flows = $500,000

average total assets = $2,500,000

to find out

cash flow on total assets ratio

solution

we get here cash flow on total assets ratio that is equal to

cash flow on total assets ratio = Operating cash flow ÷ Average total assets   ..................1

put here value we get

cash flow on total assets ratio = $\frac{120000}{2500000}$

cash flow on total assets ratio = 4.8 %

so correct option is a) 4.8%