Denominator in the ratio of cash to monthly cash expense is calculated as _____.

Question

Quizplus · Accepted Answer

The denominator in the ratio of cash to monthly cash expense represents the monthly cash expense, which is typically derived from the net cash flows from operations divided by 12. This is because net cash flows from operations represent the cash generated from the company's core operations, which includes expenses such as salaries, rent, and utilities. Therefore, dividing this amount by 12 gives us the monthly cash expense of the company.

Denominator in the Ratio of Cash to Monthly Cash Expense