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MC Qu. 37 (LO11-6) We calculate cash return... We calculate cash return on assets as: Multiple Choice Net cash flows from operating activities divided by ending total assets. The change in cash divided by ending total assets. The change in cash divided by average total assets. Net cash flows from operating activities divided by average total assets.

Question

MC Qu. 37 (LO11-6) We calculate cash return... We calculate cash return on assets as:

Multiple Choice

Net cash flows from operating activities divided by ending total assets.

The change in cash divided by ending total assets.

The change in cash divided by average total assets.

Net cash flows from operating activities divided by average total assets.

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Solution

The correct answer is:

Net cash flows from operating activities divided by average total assets.

This is because cash return on assets measures how effectively a company can convert its money into net income. It is calculated by taking the net cash flows from operating activities (which represents the money generated from a company's core business operations) and dividing it by the average total assets (which represents the average amount of resources a company has to generate its income). This gives a ratio that shows how much cash flow the company is generating relative to its assets.

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