Question

International Genetic Technologies (InGen) and The Resources Development Association (RDA) are companies involved in cutting-edge genetics research. Selected financial data for (InGen) and (RDA) are as follows: (Enter your answers in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5).)

($ in millions)	InGen		RDA
Net sales	$	133,245	$	110,916
Net income		7,995		15,990
Operating cash flows		13,500		18,111
Total assets, beginning		160,400		123,452
Total assets, ending		146,800		133,600
Required: 1. Calculate the return on assets for both companies. 2. Calculate the cash return on assets for both companies. 3. Calculate the cash flow to sales ratio and the asset turnover ratio for both companies. 4. Which company has the more favorable ratios? International Genetic Technologies (InGen) Resources Development Association (RDA)

Answer 1

Calculate average total assets:

1. Calculate the return on assets for both the companies.

2. Calculate the cash return on assets for both the companies.

3. Calculate the cash flow to sales ratio and assets turnover ratio for both the companies.

4. Company having more favorable ratios.

Resources Development Association (RDA) has the more favorable ratios.