Concept explainers
Requirement – 1
Return on total Assets:
It is a measure to evaluate the efficiency of company’s assets. It reports the profit earned as the percentage of total assets used in the business. A company’s
The formula to compute return on asset:
To calculate: The return on assets of Company Z.
Requirement – 2
Cash return on assets:
It refers to the rate of cash generated from the investments in assets of company. It is relationship between the
The formula to compute cash return on assets:
To calculate: The cash return on assets of Company Z.
Requirement – 3
Cash flows to sales:
It measures the cash generated from operating activities for each dollar of sales.
The formula to compute cash return on assets
Assets Turnover:
It’s a measure to evaluate the efficiency of total assets used in the business to generate sales during a certain period. Assets turnover reflects the net sales as the times of average total assets.
The formula to compute asset turnover
To calculate: The cash flow to sales ratio and asset turnover ratio of Company Z:
Want to see the full answer?
Check out a sample textbook solutionChapter 11 Solutions
FINANCIAL ACCOUNTING W/ACCESS >CI<
- The following balance sheets and income statement were taken from the records of Rosie-Lee Company: Additional transactions were as follows: a. Sold equipment costing 21,600, with accumulated depreciation of 16,200, for 3,600. b. Issued bonds for 90,000 on December 31. c. Paid cash dividends of 36,000. d. Retired mortgage of 108,000 on December 31. Required: 1. Prepare a schedule of operating cash flows using (a) the indirect method and (b) the direct method. 2. Prepare a statement of cash flows using the indirect method.arrow_forwardWhich item is added to net income when computing cash flows from operating activities? a. Gain on the disposal of property, plant, and equipment b. Increase in wages payable c. Increase in inventory d. Increase in prepaid rent Use the following information for Multiple-Choice Questions 11-9 and 11-10: Cornett Company reported the following information: cash received from the issuance of common stock, $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000.arrow_forwardSmoltz Company reported the following information for the current year: cost of goods sold, $252,500; increase in inventory, $21,700; and increase in accounts payable, $12,200. What is the amount of cash paid to suppliers that Smoltz would report on its statement of cash flows under the direct method? a. $218,600 c. $262,000 b. $243,000 d. $286,400arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning