following details are given for a company:
average total assets 1860000
total cash flows. 1440000
cash flow from operations 235000
cash flow from financing. 810000
cash flow on total assets ratio is:
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The cash flow on the total assets ratio is 12.6%
Explanation:
- The cash flow on the total assets is an efficiency ratio, which states the rates that actually cash flows to the assets of the company without being affected through the income recognition.
- It is computed with the formula as:
Cash flow on the total assets ratio = Cash flow from operations / Average total assets
where
Cash flow from operations is $235,000
Average total assets is $1860,000
- Putting the values above:
= $235,000 / $1860,000
= 12.6%
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