Use the Cash Flow on Total Assets Ratio to Determine

question 161

Multiple Choice

Use the cash flow on total assets ratio to determine which of these three companies is most efficiently using its assets.

• A)Company A
• B)Company B
• C)Company C
• D)As all the companies have the same cash from operations,they are all equally efficient in the use of their assets
• E)Cannot be determined from the given information

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of investments.

Discount Factor(s)

A multiplicative factor used to calculate the present value of future cash flows by accounting for the time value of money.

Discount Rate

The interest rate used in discounted cash flow analysis to calculate the present value of future cash flows.

Net Present Value

The variance between cash inflows' and outflows' current values during a certain period.