We calculate cash return on assets as

Question

Quizplus · Accepted Answer

Cash return on assets measures how much cash is generated from each dollar of assets. Therefore, it is calculated by dividing net cash flows from operating activities by average total assets, as it shows how much cash is generated from each dollar of assets used in regular business operations. Option A divides the change in cash, but it is not an accurate measure of how efficiently assets are used. Option C divides the change in cash with ending total assets, which may not reflect the entire period; while option D divides net cash flows from operating activities by ending total assets, which may not reflect the average amount of assets used.

We Calculate Cash Return on Assets as