I am having a look on Google for the calculation of this ratio. I came across two variants but the explanations for the one I am about to mention below are very vague so it is difficult for me to understand it without asking someone, that is why I am hoping someone on this forum that has come to my rescue before will do the same again.
Cash Return on Assets Ratios:
The cash return on assets (excluding interest) contains no provision for replacing assets or future commitments.
Cash Return on Assets (excluding interest) = (cash flows from operations before interest and taxes) / total assets.
How do I work out the cash flow from operations before interest and taxes?
And what exactly is this variant telling me. It says in the brief explanation above "provisions for replacing assets or future commitments"
What does this mean, can someone give me an example so I can get my head around it?
The other variant is Cash flow from operations / total assets. This is okay for me to understand as there are decent explanations on Google,
Thanks all for putting up with my complete stupid and novice questions, but I'll be the first to admit I am a complete newbie.