Cash Return On Assets Ratio

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DEFINITION of 'Cash Return On Assets Ratio'

A ratio used to compare a businesses performance among other industry members. The ratio can be used internally by the company's analysts, or by potential and current investors. The ratio does not however include any future commitments regarding assets, nor does it include the cost of replacing older ones.

Cash Return On Assets = cash flow from operations
total assets

INVESTOPEDIA EXPLAINS 'Cash Return On Assets Ratio'

A high cash return on assets ratio can indicate that a higher return is to be expected. This is because the higher the ratio, the more cash the company has available for reintegration into the company, whether it be in upgrades, replacements or other areas.

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