Question
In: Accounting
Adjust the Cash Balance We obtain the following 2018 forecasts of selected financial statement line items...
Adjust the Cash Balance
We obtain the following 2018 forecasts of selected financial
statement line items for Journey Company.
| $ millions | 2017 Actual | 2018 Est. |
|---|---|---|
| Net Sales | $688,555 | $720,440 |
| Marketable securities | 67,096 | 62,096 |
| Long-term debt | 346,558 | 308,437 |
| Treasury stock (deducted from equity) | 51,174 | 51,174 |
| Cash generated by operations | 57,585 | |
| Cash used for investing | (14,797) | |
| Cash used for financing | (54,771) | |
| Total net change in cash | (11,983) | |
| Cash at beginning of period | 51,141 | |
| Cash at end of period | $39,158 |
a. Does forecasted cash deviate from the normal level for this
company?
Calculate the company's normal cash level as a percentage of
sales.
Round answer to one decimal place.
Answer
%
Using the rounded answer above, compute what should be the normal
cash balance for FY2018.
Round answer to the nearest million.
$Answer
million
b. Is the deviation in part a large enough to require adjustment?
Explain.
No. the deviation is not large enough to require an adjustment.
Yes, the deviation is large enough to require an adjustment.
c. Identify three ways to adjust the forecasted cash balance.
Which option would least likely be used to adjust the cash
balance?
Sell marketable securities
Decrease capital expenditures
Increase long-term debt
Sell treasury stock
d. Fill in the blanks in the following statement of cash flows assuming long-term debt is used to adjust the forecasted cash balance.
Use negative signs with answers, when appropriate.
| Cash generated by operations | $Answer | |||
| Cash used for investing | Answer | |||
| Cash used for financing | Answer | |||
| Total change in cash | Answer | |||
| Cash at beginning of period | Answer | |||
| Cash at end of period | $Answer |
e. Fill in the blanks in the following statement of cash flows assuming marketable securities are used to adjust the forecasted cash balance.
Use negative signs with answers, when appropriate.
| Cash generated by operations | $Answer | |||
| Cash used for investing | Answer | |||
| Cash used for financing | Answer | |||
| Total change in cash | Answer | |||
| Cash at beginning of period | Answer | |||
| Cash at end of period | $Answer |
Solutions
ekkarill92 answered 9 months agoRelated Solutions
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