XYZ Company had net sales during the period of \$380,000 and operating cash flows of \$60,000. If total assets were \$480,000 at the beginning of the period and \$720,000 at the end of the period, what is the company's cash return on assets?

• A. 8%
• B. 10%
• C. 13%
• D. 63%

Answer: (B)

Verified step by step guidance

1. Understand the formula for Cash Return on Assets, which is: \( \text{Cash Return on Assets} = \frac{\text{Operating Cash Flows}}{\text{Average Total Assets}} \times 100 \).
2. Calculate the Average Total Assets by taking the sum of the total assets at the beginning and end of the period, then dividing by 2: \( \text{Average Total Assets} = \frac{\text{Total Assets at Beginning} + \text{Total Assets at End}}{2} \).
3. Substitute the given values into the Average Total Assets formula: \( \text{Average Total Assets} = \frac{480,000 + 720,000}{2} \).
4. Substitute the Operating Cash Flows and the calculated Average Total Assets into the Cash Return on Assets formula: \( \text{Cash Return on Assets} = \frac{60,000}{\text{Average Total Assets}} \times 100 \).
5. Calculate the percentage to find the Cash Return on Assets, which will give you the company's cash return on assets as a percentage.