Question
Beach Bake, a maker of a new sunscreen, wants to know how long it can hold out before it will run into a negative cash
Beach Bake, a maker of a new sunscreen, wants to know how long it can hold out before it will run into a negative cash situation. How should the company calculate the number of months it has left?
A. It should divide cash on hand by cash outflow per month to get the number of months it has left.
B. It should use the following formula: [(cash available revenue)/negative cash outflow per month] X 12 number of months before cash runs out.
C. It should calculate the burn rate by dividing (cash available revenue) by negative cash outflow per month.
D. It should use the following formula: (cash available revenue)/negative cash outflow per month/12 number of months before cash runs out. E. It should divide current revenue by cash outflows to get the number of months it has left.
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