How is the cash flow on total assets ratio calculated?

The cash flow on total assets ratio is calculated by dividing cash flows from operations by average total assets. This means that you take the net cash generated from the business’s operational activities and divide it by the average of total assets over a specific period of time.

This ratio helps in assessing how effectively a company is using its assets to generate cash flow. A higher ratio indicates better performance, as it shows that the company is generating more cash from its asset base.

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