Practice Exam - Chapter 12
Reporting & Analyzing Cash Flows
Dr. Fred Barbee
Solution to Short-Problem #2
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ACCT 201 Principles of Financial Accounting Practice Exam - Chapter 12 Reporting & Analyzing Cash Flows Dr. Fred Barbee Solution to Short-Problem #2 |
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A company reported operating cash flows in 2001 of $23,400 and $26,220 in 2002. Its average total assets in 2001 was $262,000 and $285,000 in 2002. Calculate the cash flow on total assets ratio for both years. Comment on the results.
| 2002 = $23,400 / $262,000 = 8.9% 2002 = $26,220 / $285,000 = 9.2% |
| The company had an increase in net operating cash flow and a corresponding increase in average total assets over the two-year time period. Its efficiency in the use of its assets to generate operating cash flow increased over the past two years. |