A Company Reported Operating Cash Flows in Year 1 of $23,400

question 123

Essay

A company reported operating cash flows in Year 1 of $23,400 and $26,220 in Year 2. Its average total assets in Year 1 were $262,000 and $285,000 in Year 2. Calculate the cash flow on total assets ratio for both years. Comment on the results.

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Definitions:

Owner's Equity

The value that accrues to the owners of a company after settling all its debts, equivalent to the assets minus the liabilities.

Residual Equity

Residual Equity represents the amount of equity that remains for the common shareholders after all liabilities and preferential stock claims have been settled.

Assets

Assets are possessions of an individual or a business that hold value and can yield benefits in the future.

Liabilities

Financial obligations or debts that a company owes to outside parties, which must be paid back in the future.