In: Accounting
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 /$233,715=0.35
18. In one or two sentences, briefly explain what the calculations mean. What does the trend show? Hint: This ratio indicates how much cash is generated from or (used in) operations for every dollar in sales. This is a way to measure the efficiency of operations in generating cash from sales.
15 | Year | (Cash generated by or (used in) operating activities/ Dividends | ||
2017 | =$ 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 |