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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cash to monthly cash expenses ratio

Capstone Turbine Corporation produces and sells turbine generators for such applications as charging electric, hybrid vehicles. Capstone Turbine reported the following financial data for a recent year (in thousands):

Net cash flows from operating activities $(23,018)
Cash and cash equivalents 32,221
  1. a. Determine the monthly cash expenses. Round to one decimal place.
  2. b. Determine the ratio of cash to monthly cash expenses. Round to one decimal place.
  3. c. Based on your analysis, do you believe that Capstone Turbine will remain in business?

(a)

To determine

Cash and cash equivalents: Cash is the money readily available in the form of currency. Cash equivalents are the near-cash items, which are readily convertible into cash.  Cash equivalents have a maturity period of three months, or less than 3 months.

To compute: Monthly cash expenses.

Explanation
Monthly cash expenses are those cash expenses that are estimated from the operating activities section of the statement of the cash flows. These monthly cash expenses are otherwise referred to cash burn...

(b)

To determine

To compute: the ratio of cash to monthly cash expenses.

(c)

To determine
the implications of ratio.

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