Cash Return On Assets Ratio

Categories: Accounting,

A ratio that is used when comparing a business' performance against other members in the industry. The ratio may be used by the company internally, by analysts of the company, or by potential investors or current investors. The ration does not include future asset commitments. It also does not include the cost of replacing older commitments. When a high cash return on assets ratio is listed, it can indicate to investors that a higher return is anticipated. This is due to the theory that the higher the ratio, the more cash the company has made available for reinvestment in the company either through replacements or replacements.