How to Calculate the Cash Flow on a Total Assets Ratio

by Edriaan Koening

Ratios can help you analyze a business' financial circumstances and performance. Cash flow on total assets ratio shows how a business uses its assets to generate cash flow, so you can determine its profitability and efficiency. To calculate cash flow on total assets ratio, you need a company's financial data and input these figures into a formula. The higher the cash flow on total assets ratio, the better the ability to generate cash.

Find the company's financial statements, particularly its cash flow statement and balance sheet. These documents contain the financial data you need to perform this calculation.

Review the company's cash flow statement and find its cash flow from operations. This figure represents the amount of money the company gets from its main operating activities. You may deduct the company's interest and tax expenses from this cash flow figure. Taking these expenses into consideration will decrease your ratio figure and provide a more conservative result for analysis.

Get the company's total assets figure from its balance sheet. You will find it in the first section of the balance sheet.

Divide the cash flow figure from Step 2 by the total assets figure from Step 3. This gives you the company's cash flow on total assets ratio.

Multiply the result from Step 4 by 100 to express the cash flow on total assets ratio as a percentage.

Photo Credits

  • Jupiterimages/Comstock/Getty Images