Two competitors in the construction supply industry report the following selecte

Question

Two competitors in the construction supply industry report the following selected financial data:    

1. Calculate the cash return on assets, cash flow to sales ratio, and asset turnover ratio for each company. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Asset Turnover

Company A %

Company B %  

Company A Company B   Sales $ 46,770 $ 65,476   Net income 1,713 2,810   Operating cash flows 4,024 5,175   Total assets, beginning 33,355 40,027   Total assets, ending 32,025 41,414

Explanation / Answer

1. Cash Return on Assets(CROA) = Operating Cash Flows / Average Total Assets

Average total assets = Opening assets + Closing assets / 2

For Company A = 33,355 + 32,025 / 2 = 32,690

For Company B = 40,027 + 41,414 / 2 = 40,720.5

CROA for Company A =(4,024 / 32,690) * 100 = 12.3%

CROA for Company B =(5,175 / 40,720.5) * 100 = 12.7%

2. Cash flow to sales = (Operating Cash flows / Net sales) * 100

Company A = (4,024/46,770) * 100 = 8.60%

Company B = (5,175/65,476) * 100 = 7.90%

3. Assets Turnover Ratio = (Average Assets / Net sales) * 100

Company A = (32,690/46,770) * 100 = 69.89%

Company B = (40,720.5/65,476) * 100 = 62.19%

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.