Question

The balance sheet of Cranium Gaming reports total assets of $380,000 and $680,000 at the beginning and end of the year, respectively. Sales revenues are $1.30 million, net income is $63,000, and operating cash flows are $54,000. Calculate the cash return on assets, cash flow to sales, and asset turnover for Cranium Gaming. (Enter your answers in dollars, not millions (i.e., $10.1 million should be entered as 10,100,000).)

Answer 1

See below

Step-by-step explanation:

1. Cash return on assets

= Operating cash flow / Average total asset

Operating cash flows = $54,000

Average total asset = [($380,000 + $680,000) / 2] = $530,000

Cash return on assets

= $54,000 / $530,000

= 10.19%

2. Cash flow to sales

= Operating cash flows / Net sales

Operating cash flows = $54,000

Net sales = $1,300,000

Cash flow to sales

= $54,000 / $1,300,000

= 4.15%

3. Asset turnover

= Net sales / Average total assets

Net sales = $1,300,000

Average total assets = $530,000

Asset turnover

= $1,300,000 / $530,000

= 2.5 times