Farm Store,Inc.reported the following data in its December 31 annual report.
$\begin{array}{llcc}
\text { Cash and cash equivalents } & \$ 1,050,000 \
\text { Negative cash flows from operations } & 420,000
\end{array}$
a What is the company's "cash burn" per month?
b What is the company's ratio of cash to monthly cash expenses?
c Interpret the ratio you computed in part 2.What are the implications for Farm Store,Inc.?

Question

Farm Store,Inc.reported the following data in its December 31 annual report.
 $\begin{array}{llcc}
  \text { Cash and cash equivalents  } &  \$ 1,050,000 \
 \text { Negative cash flows from operations } & 420,000
\end{array}$
 a What is the company's "cash burn" per month?
b What is the company's ratio of cash to monthly cash expenses?
c Interpret the ratio you computed in part 2.What are the implications for Farm Store,Inc.?

Quizplus · Accepted Answer

The Answer of Farm Store,Inc.reported the following data in its December 31 annual report.
 $\begin{array}{llcc}
  \text { Cash and cash equivalents  } &  \$ 1,050,000 \
 \text { Negative cash flows from operations } & 420,000
\end{array}$
 a What is the company's "cash burn" per month?
b What is the company's ratio of cash to monthly cash expenses?
c Interpret the ratio you computed in part 2.What are the implications for Farm Store,Inc.?