We calculate cash return on assets as
A)The change in cash divided by average total assets.
B)Net cash flows from operating activities divided by average total assets.
C)The change in cash divided by ending total assets.

Question

Quizplus · Accepted Answer

Cash return on assets is calculated by dividing the net cash flows from operating activities by average total assets. This metric helps to evaluate how efficiently a company generates cash from its assets. Choice A is incorrect as it calculates the change in cash, which may not be a reliable indicator of a company's ability to generate cash. Choice C is also incorrect as it divides the change in cash by only the ending total assets, which does not provide a comprehensive view of the company's performance over a period of time.

We Calculate Cash Return on Assets as