Financial Analysis Recommendation for Cerus Corporation, business & finance homework help

I need to determine a recommendation for Cerus Corporation to save their company from running out of money. I want to say that Cerus needs to cut down on R&D spending and SGA spending (you can see on their income statement they spend A LOT on R&D and SGA). I need you to determine an exact AMOUNT for them to cut down on R&D/SGA AND explain in words why you chose this amount. You then need to create cash flow calculations (on excel probably) to predict how reducing R&D/SGA by this amount will help increase cash flow.

I also need you to determine when Cerus will run out of cash (determine their burn rate, essentially) if they keep going down the same path.

Also, if you could determine the risks associated with this recommendation (by cutting R&D and SGA), i.e. someone else could enter the marketplace, etc., that would be awesome. Also, describe the risks associated with continuing down the path they are already going/going at their same rate of spending…If you can quantify this with financial forecasting metrics, that would be ideal.

I need as many SPECIFIC details/numbers as possible to QUANTIFY expected results of my recommendation. This is a financial analysis class, so please use financial metrics/calculations.

Pg 56-58 on the annual report 2016 talk a lot about R&D/SGA spending, which might be helpful to write it all up. PLEASE contact me if you have any questions/need more info. The more writing/calculations you do, the better!

I have attached the paper we are writing…your added portions will primarily go in the “Recommendation” and “Expected Results” sections. This can help you with context.

Finally, here is a summary of what we need to do (underlined portions are super important):

1) We need to clearly define our strategy to improve Cerus’ situation. Specifically, we want to state that the research and development expenses you may wish to limit it to R&D or you may wish to consider other costs as well including General and Administrative are too high, and the company should restrict/decrease this expenditure for x amount of time or by x dollars. This need to be the prime focus of our recommendations section.

2) 2) Then we should support this statement with projected numbers, yes namely how much money would be saved and how that would affect the overall company. This will be stated in the expected results section. Please express it as an income statement: revenue less (revised) expenses

3) 3) Our third goal is to identify how much money cash and equivalents the company currently has, at what rate they are losing money, yes, if by this you mean the rate at which they are using cash and make a projection for how long it will take them to run out of money cash and equivalents. Then project how cutting the research and development budget will affect this timeline. These points should be added to the expected results section of the paper.

4) 4) We should speak to the risks involved in spending too much money on research and development. Then also speak about the potential risk if research and development is curtailed (someone else might beat them to the market as a result, for example). This information will be incorporated into our expected results section.

Thank you!