The balance sheet of Sound Designs reports total assets of $750,000 and $800,000 at the beginning and end of the year,respectively.Sales revenues are $1.5 million ($1.2 million in the previous year),net income is $150,000,and net cash flows from operating activities are $175,000.What is Sound Designs' cash flow to sales?

Question

Quizplus · Accepted Answer

Cash flow to sales ratio is calculated by dividing net cash flows from operating activities by sales revenue, and multiplying by 100. Therefore, Sound Designs' cash flow to sales is: ($175,000 ÷ $1,500,000) x 100 = 11.7%. The correct option is B.

The Balance Sheet of Sound Designs Reports Total Assets of $750,000