Question

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


Company A Company B Company C
Cash provided by operations $ 400,000 $ 400,000 $ 400,000
Cash provided (used) by investing activities
Purchase of operating assets (90,000) (80,000) (20,000)
Cash provided (used) by financing activities
Repayment of debt (10,000) (40,000) (30,000)
Net increase in cash $ 300,000 $ 280,000 $ 350,000
Average total assets $ 4,000,000 $ 5,000,000 $ 6,000,000

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

Answer

This answer is hidden. It contains 10 characters.