In: Accounting
Cash to Monthly Cash Expenses Ratio
Amicus Therapeutics, Inc., is a biopharmaceutical company that develops drugs for the treatment of various diseases, including Parkinson’s disease. Amicus Therapeutics reported the following financial data (in thousands) for three recent years:
For Years Ended December 31 | ||||||
Year 3 | Year 2 | Year 1 | ||||
Cash and cash equivalents | $11,760 | $21,300 | $37,310 | |||
Net cash flows from operations | (28,800) | (36,000) | (49,200) |
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 for Year 3, Year 2, and Year 1 as of December 31. Round to one decimal place.
Year 3: | months |
Year 2: | months |
Year 1: | months |
c. Based on (a) and (b), which of the following statements is correct.
1. | Amicus has been able to support its operations by issuing additional stock. However, its negative cash flows have increased from Year 1 to Year 3. |
2. | Amicus has been able to support its operations generating positive cash flows. Its positive cash flows have increased from Year 1 to Year 3. |
3. | Amicus has been able to support its operations generating positive cash flows. However the cash flows generated are used to purchase short term investment. |