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Unformatted text preview: sh Flows
cash flows. Financial Accounting Operating activities
Interest and div idends on investments
Interest on debt obligations
Cash Flows from Operating Activities
Purchase of property, plant or equipment
Purchase of other long-term assets
S of property, plant or equipment
S of other long-term assets
Cash Flows from Investing Activities
Issuance of long-term debt
Issuance of contributed capital
Repurchase of long-term debt
Repurchase of contributed capital
Cash Flows from Financing Activities
Net increase or (decrease) in cash
Beginning balance in cash account
Ending balance in cash account Effect on
Total LO 6 3-34 Total Asset Turnover Ratio
Ratio = Sales (or Operating) Revenues
Average Total Assets (Beginning total assets + ending total assets) ÷ 2
Nestlé's Total Asset Turnover Ratio for 2009 (dollars in millions):
($106,215 + $110,915) ÷ 2 This ratio measures the sales
generated per dollar of assets.
Financial Accounting = 0.99 Creditors and analysts use this ratio to
assess a company’s effectiveness at
controlling current and noncurrent assets.
LO 6 3-35 Return on Assets (ROA) Ratio
Ratio = Profit* + Interest Expense (net of tax)
Average Total Assets (Beginning total assets + ending total assets) ÷ 2 ROA measures how much the firm earned for each
dollar of investment.
This ratio answers the question “How well has
management use the total invested capital provided by
debtholders and shareholders during the period?”
In complex calculations, interest expense (net of tax) and minority interest are added back to profit.
* Financial Accounting LO 6 3-36 End of Chapter 3 Financial Accounting...
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This note was uploaded on 04/02/2012 for the course AFM 101 taught by Professor Kennedy during the Winter '08 term at Waterloo.
- Winter '08