Computing Cash Based Ratios
Consider the following information:
|
Windbag International, Inc. Selected Financial Statement Information (Dollars in Millions) |
||
|
2000 |
1999 |
|
|
Total assets |
$1,086 |
$ 996 |
|
Total owners’ equity |
681 |
660 |
|
Debt |
145 |
201 |
|
Sales |
1,256 |
1,199 |
|
Accounts receivable |
28 |
27 |
|
Depreciation expense |
74 |
69 |
|
Interest paid |
19 |
22 |
|
Taxes paid |
53 |
42 |
|
Purchases of property, plant, and equipment |
142 |
117 |
|
Net cash outflow from investing activities |
95 |
107 |
|
Cash flow from operating activities |
166 |
147 |
|
Net income |
97 |
79 |
Required
a. Calculate the following ratios, for each year:
1. Cash return on assets (2000 only)
2. Quality of sales
3. Quality of income
4. Cash interest coverage
b. Based on your ratios, evaluate Windbag’s performance. In what areas do the cash flow ratios indicate positive or negative performances?