We calculate cash return on assets as

Question

Quizplus · Accepted Answer

Cash return on assets measures how efficiently a company generates cash from its assets. The formula for cash return on assets is net cash flows from operating activities divided by average total assets. Option B represents this formula. Option A is incorrect because it only looks at the change in cash, whereas we want to see how much cash the company is generating from its assets. Option C is incorrect because we are interested in measuring how efficiently the company generates cash, not how much cash it has at the end of the period. Option D is incorrect because we want to use average total assets, not ending total assets, to account for any changes in asset values throughout the period.

We Calculate Cash Return on Assets as