16

The cash flow on total assets ratio:

Multiple Choice

• Is the same as return on assets.

• Is the same as profit margin.

• Can be an indicator of earnings quality.

• Is highly affected by accounting principles of income recognition and measurement.

• Is average net assets divided by cash flows from operations.

17

The cash flow on total assets ratio is calculated by:

Multiple Choice

• Dividing cash flows from operations by average total assets.

• Dividing total cash flows by average total assets.

• Dividing average total assets by cash flows from investing activities.

• Dividing average total assets by total cash flows.

• Total cash flows divided by average total assets times 365.

18

A company had net cash flows from operations of $341,000, net income of $286,000 and average total assets of $1,850,000. The cash flow on total assets ratio equals:

Multiple Choice

• 83.9%

• 542.5%

• 15.5%

• 18.4%

• 646.9%

19.

A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

Multiple Choice

• 4.8%.

• 5.0%.

• 20.0%.

• 20.8%.

• 24.0%.

Preparation of the statement of cash flows does not involve:

Multiple Choice

• Computing the net increase or decrease in cash.

• Computing and reporting net cash provided or used by operations.

• Computing the profit compared to the net increase or decrease in cash.

• Computing and reporting net cash provided or used by financing activities.

• Computing and reporting net cash provided or used by investing activities.