Answer: 12%

## Explanation **Cash Return on Assets Ratio** is calculated as: \[ \text{Cash Return on Assets} = \frac{\text{Cash Flow from Operations}}{\text{Average Total Assets}} \] **Step 1: Calculate Average Total Assets** \[ \text{Average Total Assets} = \frac{\text{Beginning Total Assets} + \text{Ending Total Assets}}{2} \] \[ \text{Average Total Assets} = \frac{4,000 + 6,000}{2} = \frac{10,000}{2} = 5,000 \] **Step 2: Calculate Cash Return on Assets** \[ \text{Cash Return on Assets} = \frac{600}{5,000} = 0.12 = 12\% \] **Why this is correct:** - Cash flow from operations is £600,000 - Average total assets is £5,000,000 - The ratio is 600/5,000 = 0.12 or 12% **Why other options are incorrect:** - **10%**: This would be 500/5,000, which incorrectly uses net income instead of cash flow from operations - **13%**: This would be approximately 650/5,000, which doesn't match any logical calculation from the given data **Key Concept:** Cash return on assets measures how efficiently a company generates cash from its assets, using cash flow from operations rather than net income, which provides a better measure of actual cash generation.

Author: LeetQuiz .