Chapter 12, Problem 13E

To determine

Cash Flow on Total Assets:

It is that ratio which indicates the position of company whether it is able to fulfill its obligation or not within the relevant time period. It is the cash based ratio. Through this ratio quality of earning of the company can be known. A company is said to be have good quality of earning if the cash flow on total assets is exceed the return on total assets. It can be calculated by dividing the cash flow operation to average total cost.

To identify: Cash flow on total assets ratio.