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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 $ 69,485 $ 24,074 $ 43,640 Net cash flows from operations (100,139) (51,669) (45,794) a. Determine the monthly cash expenses for Year 3, Year 2, and Year 1. Round to one decimal place. 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. c. Based on (a) and (b), comment on Amicus Therapeutics' ratio of cash to monthly operating expenses for Year 3, Year 2, and Year 1.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 8, Problem 8.28EX
Textbook Problem

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 $ 69,485 $ 24,074 $ 43,640
Net cash flows from operations (100,139) (51,669) (45,794)
  1. a. Determine the monthly cash expenses for Year 3, Year 2, and Year 1. Round to one decimal place.
  2. 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.
  3. c. Based on (a) and (b), comment on Amicus Therapeutics' ratio of cash to monthly operating expenses for Year 3, Year 2, and Year 1.

Expert Solution

(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 for Year 3, Year 2 and Year 1.

Explanation of Solution

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...

Expert Solution

(b)

To determine

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

Expert Solution

(c)

To determine

To comment: Ratio of cash to monthly operating expenses for Year 3, Year 2, and Year 1.

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Chapter 8 Solutions

Accounting
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