Cash to Monthly Cash Expenses Ratio During 2014 Pierport Inc

Cash to Monthly Cash Expenses Ratio During 2014, Pierport Inc, has monthly cash expenses of s50,000. On December 31, 2014, the cash balance is $400,000. a. Compute the ratio of cash to monthly cash expenses months b. At the current rate of operations, Pierport has a specofic number of months of cash remaining. Pierport should:

Solution

a)Ratio of cash to monthly cash expense= 400000/50000

              = 8 months

b)At the current rate of operations ,pierport inc has 8 months cash remaining at year end .the firm should either restructure its operations or begin planning to raise additional funds in order to continue the business.