International Genetic Technologies (InGen) and The Resources Development Association (RDA) are companies involved in cutting-edge genetics research. Selected financial data for (InGen) and (RDA) are provided below: (Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).) ($ in millions)InGenRDANet sales$163,245$130,916Net income9,79519,590Operating cash flows13,53920,281Total assets, beginning233,400173,452Total assets, ending134,278144,433 Required:1. Calculate the return on assets for both companies. ($ in millions)Return on Assets =Return on AssetsInGen %RDA %2. Calculate the cash return on assets for both companies. ($ in millions)Cash Return on Assets =Cash Return on AssetsInGen %RDA %3. Calculate the cash flow to sales ratio and the asset turnover ratio for both companies.($ in millions)Cash Flow to Sales =Cash Flow to SalesInGen %RDA % Asset Turnover =Asset TurnoverInGen timesRDA times

Answered: International Genetic Technologies…

Here in this question we are required to calculate various ratios. Return on asset:- Return on asset ratio compares net income with average asset used. Formula :- (Net income / Average asset used) *100 Cash return on asset:- Cash return on asset compares operating cashflow with the average asset used. Formula:- (Operating cashflows / Average asset used) *100 Cashflow to sales ratio:- Cashflow to sales ratio compares how much operating cashflow is generated in compare to sales. Formula:- (Operating cashflow / Net sales) *100 Asset turnover ratio:- Asset turnover ratio compare how much sales is generated from average asset used. Formula:- Net sales / Average assetsNow lets calculate the requirement. (1) Return on asset:- InGen = ($9,795 / (($233,400 + $134,278)/2)) *100 = 5.3% RDA = $19,590 / (($173,452 + $144,433)/2)) *100 = 12.3% (2) Cash return on asset:- InGen = ($13,539 / (($233,400 + $134,278)/2)) *100 = 7.4% RDA = $20,281 / (($173,452 + $144,433)/2)) *100 = 12.8% (3) Cashflow to sales ratio:- InGen = ($13,539 / $163,245) *100 = 8.3% RDA = ($20,281 / $130,916) *100 = 15.5% (4) Asset turnover ratio:- InGen = ($163,245 /(($233,400 + $134,278)/2)) = 0.89 Times RDA = ($130,916 / (($173,452 + $144,433)/2)) = 0.82 Times

($ in millions)

Return on Assets

Return on Assets

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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International Genetic Technologies (InGen) and The Resources Development Association (RDA) are companies involved in cutting-edge genetics research. Selected financial data for (InGen) and (RDA) are provided below: (Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).)

($ in millions)	InGen	RDA
Net sales	$163,245	$130,916
Net income	9,795	19,590
Operating cash flows	13,539	20,281
Total assets, beginning	233,400	173,452
Total assets, ending	134,278	144,433

Required:

1. Calculate the return on assets for both companies.

2. Calculate the cash return on assets for both companies.

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

($ in millions)
Cash Flow to Sales
	=	Cash Flow to Sales
InGen			%
RDA			%

Asset Turnover
	=	Asset Turnover
InGen			times
RDA			times

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