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What is the Cash Percentage of Sale? Does the Cash Percentage follow the inventory rank? Please,...

What is the Cash Percentage of Sale? Does the Cash Percentage follow the inventory rank?

Please, Provide your answer in details for the following example for 2016 and 2015 respectively?

Cash Percentage of Sales 10% 4%

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Answer #1

Cash percantage of sale is the ratio between the cash flows of a company to its sales revenues. It indicates the company's ability to generate cash from its sales.

cash percantage of sales = ( Operating cash flow/ sales revenue) * 100

The higher is the cash percantage the better is for the company, as it will generate more cash inflow

for example the the cash percanatge of sales for the year 2015 and 2016 are 10% and 4%

Let the sales reveue for the year 2015 and 2016 is $ $3000

Therefore the cash inflow for the year 2015 is =$300

and for the year 2016 the cash inflow for the year 2016 is = $120

so the comapny has been able to generate more cash out of its sales in the year 2015.

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