To compute the company's cash flow on total assets ratio for its fiscal year 2021, we need to follow these steps:
The cash flow from operating activities can be derived from the net income by adjusting for non-cash expenses and changes in working capital. The key components are:
- Net Income: $119,518
- Add back Depreciation: $68,689 (a non-cash expense)
- Adjust for Gain on Sale of Equipment: Subtract $3,009 (since it is a non-operating gain)
Assuming no other changes in working capital (as no specific information is provided about changes in current assets and liabilities), the cash flow from operating activities is:
\[ \text{Cash Flow from Operating Activities} = \text{Net Income} + \text{Depreciation} - \text{Gain on Sale of Equipment} \]
\[ = 119,518 + 68,689 - 3,009 = 185,198 \]
To calculate the cash flow on total assets ratio, we need the total assets figure. However, the problem does not provide the total assets directly. Typically, this would be found on the balance sheet. For the sake of this calculation, let's assume the total assets are given or can be estimated from additional data not provided here.
The cash flow on total assets ratio is calculated as follows:
\[ \text{Cash Flow on Total Assets Ratio} = \frac{\text{Cash Flow from Operating Activities}}{\text{Total Assets}} \]
Assuming the total assets are known, you would plug in the values to get the ratio. For example, if total assets were $500,000, the calculation would be:
\[ \text{Cash Flow on Total Assets Ratio} = \frac{185,198}{500,000} = 0.3704 \text{ or } 37.04\% \]
Without the exact total assets figure, the final ratio cannot be computed precisely. However, the method described above outlines the steps needed to calculate the cash flow on total assets ratio once the total assets are known. This ratio is useful for assessing how efficiently a company is generating cash flow from its asset base.
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