The balance sheet of Sound Designs reports total assets of $750,000 and $800,000 at the beginning and end of the year,respectively.Sales revenues are $1.5 million ($1.2 million in the previous year),net income is $150,000,and net cash flows from operating activities are $175,000.What is Sound Designs' cash flow to sales?
A)22.6%.
B)11.7%.
C)14.6%.

Question

Quizplus · Accepted Answer

Cash flow to sales is calculated by dividing net cash flows from operating activities by sales revenues. For Sound Designs, this is $175,000 / $1,500,000 = 0.1167, or 11.7%.

The Balance Sheet of Sound Designs Reports Total Assets of $750,000