The garden gate inc reported the following data in its August 31 annual report.

Question

The garden gate inc reported the following data in its August 31 annual report.
Cash and cash equivalents 485625
Negative cash flow from operations 630000
Required What is the company’s average monthly cash expenses? What is the company’s ratio of cash to cash monthly cash expenses? The garden gate inc reported the following data in its August 31 annual report.
Cash and cash equivalents 485625
Negative cash flow from operations 630000
Required What is the company’s average monthly cash expenses? What is the company’s ratio of cash to cash monthly cash expenses?
Cash and cash equivalents 485625
Negative cash flow from operations 630000
Required What is the company’s average monthly cash expenses? What is the company’s ratio of cash to cash monthly cash expenses?

Explanation / Answer

Solution:

Average monthly cash expenses = Negative Cash flow from Operations / 12 = 630,000 /12 = 52,500

Ratio of cash to monthly cash expense = Cash and cash equivalents / Monthly cash expenses

= 485,625 / 52500 = 9.25 months

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