Kips Bay Medical Inc. is a medical device company that develops, produces, and sells products used in coronary surgery. The following data (in thousands) were adapted from recent financial statements.

1. Compute the monthly cash expenses for Years 1 and 2. Round to nearest thousand.
2. Compute the ratio of cash to monthly cash expenses for Years 1 and 2.
3. Including short-term investments as part of cash and cash equivalents, compute the ratio of cash to monthly cash expenses for Years 1 and 2. Round to one decimal place.
4. Comment on the results from parts (2) and (3).
5. Kips Bay Medical had negative cash flows from operations for Years 1 and 2, yet cash, cash equivalents, and short-term investments increased. How could this havehappened?

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Year 2 Year 1 Net cash flows from operating activities (8,105) End of the year cash and cash equivalents 6,211 Short-term investments Indludes various short-term securities that are readily convertible to cash. $(4,378) 3,548 236 2,957