Ratio of Cash to Monthly Cash Expenses

AcelRx Pharmaceuticals, Inc. (ACRX), develops therapies for pain relief for a variety of patients, including cancer and trauma patients. The following data (in thousands) were adapted from financial statements of a recent year.

Net cash flows from operating activities$(22,931)End of the year cash and cash equivalents11,691Short-term investments*32,190

*Includes U.S. short-term government securities that are readily convertible to cash.

1.Compute the monthly cash expenses. Round to the nearest thousand dollars.

$thousand

2.Compute the ratio of cash to monthly cash expenses, excluding short-term investments. Round your answers to one decimal place.

months

3.Including short-term investments as part of cash and cash equivalents, compute the ratio of cash to monthly cash expenses. Round your answers to one decimal place.

months

4.For the recent year, AceIRx hasnegative monthly cash expenses

. If thiscash burn

continues, AceIRx can continue operating 6.1 months using its current cash and cash equivalents. By including shortterm investments of $32,190, AceIRx can continue operating an additional 16.9 months (23.0 - 6.1) or 23.0 months in total.

5.Although AceIRx has experienced negative cash flows from operations for the past seven years, it still has cash, cash equivalents, and short-term investments of $43,881. Obviously, investors have confidence that AceIRx will be able to generate positive cash flows from operations and earn profits in the future. In fact, within the past three years AceIRxissued additional common stock and long-term debt

of over $70,210.