Question

The following financial statements and additional information are reported. 6 IKIBAN INC. Comparative Balance Sheets June 30, 20 18 and 2017 2018 2017 Assets $ 44,000 51,000 86,500 5,400 186,900 115,000 (9,000) 87,500 65,000 63,800 4,400 220,700 124,000 (27,000) Cash Accounts receivable, net Inventory Prepaid expenses Total current assets 16.7 points Equipment Accum. depreciation-Equipment еВook Print $317,700 $292,900 Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities References 25,000 6,000 3,400 $30,000 15,000 3,800 48,800 60,000 108,800 34,400 30,000 64,400 Equity Common stock, $5 par value Retained earnings 160,000 24,100 220,000 33,300 $317,700 Total liabilities and equity $292,900 IKIBAN INC. Income Statement For Year Ended June 30, 2018 Sales $678,000 411,000 267,000 Cost of goods sold Gross profit Operating expenses Depreciation expense $58,600

Answer 1

Cash Flow on Total Assets Ratio = Cash from operations/Average Total Assets

= 151410/305300 = 0.4959

Notes

1) To calculate the ratio, we fist need to calculate cash from operations which will be as under:

	Amount in $	Workings
Cash Flows from Operating Activities:
Net Income	99,510	given
Depreciation & Amortization	58,600	given
Gain on sale of equipment	-2,000	given
Increase in Accounts Receivables	-14,000	51000-65000
Decrease in Inventory	22,700	86500-63800
Decrease in Prepaid Expenses	1,000	5400-4400
Decrease in Accounts Payable	-5,000	25000-30000
Decrease in Income tax payable	-400	3400-3800
Decrease in Wages Payable	-9,000	6000-15000
Cash Flows from Operating Activities:	1,51,410

. 2) Average Total Assets = (Beginning bal + Ending bal.)/2 = (292900+317700)/2 = $305300

Please comment in case of any issue and I will be happy to help.