Question

Use the cash flow on total assets ratio to determine which of these three companies is using its assets most efficiently.


Company A Company B Company C
Cash provided by operations $ 300,000 $ 600,000 $ 400,000
Cash provided (used) by investing activities
Purchase of operating assets (190,000) (380,000) (200,000)
Cash provided (used) by financing activities
Repayment of debt (100,000) (210,000) (190,000)
Net Increase in cash $ 10,000 $ 10,000 $ 10,000
Average total assets $ 2,500,000 $ 6,000,000 $ 5,000,000

A. Company A.
B. Company B.
C. Company C.
D. As all the companies have the same net increase in cash, they are all equally efficient in the use of their assets.
E. Cannot be determined from the given information.

Answer

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