Question

15. Show your calculation for the Operating Cash Flows & Dividends Ratio (Cash generated by or (used in) operating activities/Dividends) to two decimal places for the most recent three years.

2017: $64,225/$13,735=4.68

2016: $66,231/$12,803=5.17

2015: $81,266/$12,188 =6.67

16. In one or two sentences, briefly explain what the calculations mean. What does the trend show? Hint: This ratio indicates whether or not enough money was generated from operations to cover the dividend payment. ?

17. . Show your calculation for the Operating Cash Flows & Sales Ratio (Cash generated by or (used in) operating activities/Total Revenue or Net Sales) to two decimal places for the most recent three years.

2017: $64,225 /$229,234=0.28

2016: $66,231 /$215,639=0.31

2015: $81,266 /$233,715=0.35

18. In one or two sentences, briefly explain what the calculations mean. What does the trend show? Hint: This ratio indicates how much cash is generated from or (used in) operations for every dollar in sales. This is a way to measure the efficiency of operations in generating cash from sales.

Answer 1

15	Year	(Cash generated by or (used in) operating activities/ Dividends
	2017	=$ 64,225/$ 13,735	4.68
	2016	=$ 66,231/$ 12,803	5.17
	2015	=$ 81,266/$ 12,188	6.67
16	As we can see the ratio (Cash generated by or (used in) operating activities/ Dividends) has declined year by year, from 6.67 to 5.17 and 5.17 to 4.68. It indicates that the ratio has been declined - entity may not able to generate operating cash flows to cover dividend in future
17	Year	(Cash generated by or (used in) operating activities/ Total Revenue
	2017	=$ 64,225/$ 229,234	0.28
	2016	=$ 66,231/$ 215,639	0.31
	2015	=$ 81,266/$ 233,715	0.35
18	As we can see the ratio (Cash generated by or (used in) operating activities/ Total Revene) has declined year by year, from 0.35 to 0.31 and 0.31 to 0.28. It indicates that the ratio has been declined - entity's ability of generating operating cash flows has been declined if we compare it by dividing the same with Revenue