Question

Zoogle has the following selected data ($ in millions): (Round your answers to 2 decimal place. Enter your answers in millions (i.e., $10,110,000 should be entered as 10.11).)

Net sales	$	24,151
Net income		6,570
Operating cash flows		9,321
Total assets, beginning		36,768
Total assets, ending		45,497

Required:

1. Calculate the return on assets.

2. Calculate the cash return on assets.

3. Calculate the cash flow to sales ratio and the asset turnover ratio.

rev: 12_20_2014_QC_CS-1499

Answer 1

1) calculation of return on assets

Return on assets =

net income/ average assets

Average assets =

Opening assets + closing assets /2

= $36768 + $45497/2

=$41132.50

Return on assets =$6570/41132.50

= 0.159727*100

= 15.97%

2) calculation of cash return on assets

Cash return on assets =

Operating cash flow/average assets

Given that :

Operating cash flows =$9321

Average assets =$41132.50

Cash return on

assets =$9321/41132.50

=0.226609 *100

=22.66%

3) calculation of cash flows to sales ratio

Cash flows to sales ratio =

Operating cash flow /sales

Given that :

Operating cash flow =$9321

Sales =$24151

Cash flows to

sales ratio = $9321/$24151

=0.385946

= 0.39

4) Assets turnover ratio =

sales/average assets

Given that :

Sales =$24151

Average assets =$41132.50

Assets turnover

ratio = $24151/$41132.50

= 0.58715

= 0.59 times