Cashflow To Total Assets Ratio

Profitability Measures

Cash is king! But profit generates excess cash. Why is it important to understand the cashflow to total assets ratio? Understanding the amounts of cash generated from normal business activities is critical to a healthy and sustainable small business. The CTA ratio is another measure to help you understand sustainability over time.

Cashflow To Total Assets Ratio (CTA)

What is my CTA ratio? The CTA indicator provides an understanding of how cash is generated relative to the asset base of the company. Generally, the higher the indicator, the more efficient the asset base of the company is in generating revenues. Generally, this should be greater than 1 – i.e. $1 of asset generates $1 of revenue. Please note, that Jazoodle calculates the Cash generated from operating activities only and ignores cash from financing or investing.

What does it mean?

Your assets generate cash in the form of revenues and other efficiencies within your business. This measure assesses how relatively good your assets are at generating free cash within your business. Check cash to assets ratio with Jazoodle now.

How we derive Cashflow To Total Assets Ratio?

Definition used:

Jazoodle derives your CTA ratio by

Cashflow From Operating Activities (amount)

divided by

Total Assets (amount)

How Can I Improve My Cashflow To Total Assets ratio?

Your cashflow to total assets ratio can be improved by a number of things, including:

  • Sales revenues.
  • Cost of goods (direct costs)
  • Overheads or expenses
  • Other non operating income or expenses
  • Your client receivables policies
  • Supplier payment policies
  • Short term credit policies
  • Asset purchase or disposal

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