Question

Use the following information for the Exercises below [The following information applies to the questions displayed below.] The following financial statements and additional information are reported IKIBAN INC Comparative Balance Sheets June 30, 2018 and 2017 2018 2017 Assets $ 87,500 44,000 51,000 86,500 5,400 186,900 115,000 as Accounts receivable, net Inventory 65,000 63,800 4,400 220,700 124,000 (27,000) Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets (9,000) $317,700 292,900 Liabilities and Equity Accounts payable $ 25,000 6,000 3,400 34,400 30,000 15,000 3,800 48,800 60,000 108,800 Wages payable Income taxes payable Total current liabilities Notes payable (long term) 30,000 Do Total 1iabilities Equity Common stock, $5 par value Retained earnigs 64,400 160,000 24,100 $317,700 292,900 220,000 33,300 Total liabilities and equity IKIBAN INC. Income Statement For Year Ended June 30, 2018 Sales Cost of goods sold Gross profit Operating expenses $678,000 411,000 267,000 $58,600 67,000 Depreciation expense Other expenses Total operating expenses 125,608 141,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,000 143,400 43,890 $99,510

Answer 1

Cash flow on total assets ratio

Operating cash flows = 151,410

Average total assets = (313,700 + 292,900)/2 = 303,300

Cash flow on total assets ratio = 151,410 / 303,300 = 49.92%

Answer 2

Average total assets = (317,700+292,00) / 2 = 305,300