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22 December, 06:07

Financial data for a company is provided below:Cash, end of year, $500,000Estimation of yearly cash expenses from negative cash flows from operations on statement of cash flows, $ (155,000) Cash, beginning of year, $400,000Accounts receivable, $10,000Inventory, $20,000Net Income for the yearHow many months will the company be able to continue without positive cash flows or additional financing (round to nearest whole month) ?12 months25 months39 months16 months

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  1. 22 December, 07:35
    Answer in this case will be 39 months


    In given data estimated negative cash flow from operation is (155,000), this is assumed that there will not be any cash flow from investing or financing activities.

    data given for accounts receivable and inventory is irrelevant since both are part of operating cash flow which is already estimated.

    there for closing balance at the end of year is $ 500000 divided by negative cash flow of (150,000) equals to months company will able to continue without positive cash flow or additional financing.
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