Question

Cash to Monthly Cash Expenses Ratio Action Therapeutics, Inc., reported the following financial data (in thousands) for the years ending December 31, Year 3, Year 2, and Year 1. For Years Ending December 31 Year 3 Year 2 Year 1 Cash and cash equivalents $30,600 $17,040 $10,200 Net cash flows from operations (40,800) (28,800) (24,000) a. Determine the monthly cash expenses for Year 3, Year 2, and Year 1 (in thousands). Year 3: $ per month Year 2: $ per month Year 1: $ per month b. Determine the ratio of cash to monthly cash expenses as of December 31, Year 3, Year 2, and Year 1. Round to one decimal place. Year 3: months Year 2: months Year 1: months c. Since Year 1, Action Therapeutics, Inc.'s monthly cash expenses have . Based on cash at the end of year three the company will run out of cash in about unless it changes its operations or raises additional financing.

Answer 1

Part-1 Computation of Monthly cash Expense
	Year-3	Year-2	Year-1
Cash & Cash Cash Equivalent	$30,600.00	$17,040.00	$10,200.00
Net Cash Flow from Operation (a)	-$40,800.00	-$28,800.00	-$24,000.00
Monthly Cash Expense (a/12)	-$3,400.00	-$2,400.00	-$2,000.00
Part-2 Computation of Ratio of Cash to Monthly cash Expense
	Year-3	Year-2	Year-1
Cash & Cash Cash Equivalent (a)	$30,600.00	$17,040.00	$10,200.00
Net Cash Flow from Operation	-$40,800.00	-$28,800.00	-$24,000.00
Monthly Cash Expense b)	$3,400.00	$2,400.00	$2,000.00
ratio of Cash to Monthly expense ( Cash Equivalent / Monthly Cash Expense)(a/b)	9.00	7.10	5.10
	Month	Month	Month