We obtain the following 2018 forecasts of selected financial statement line items for Journey Company. $ millions 2017 Actual 2018 Est.
Net Sales $669,666 $701,551
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 57,474
Cash used for investing (14,686)
Cash used for financing (54,882)
Total net change in cash (12,094)
Cash at beginning of period 51,141
Cash at end of period $39,047
a. Does forecasted cash deviate from the normal level for this company?
Calculate the company's normal cash level as a percentage of sales.
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?
A. Sell marketable securities
B. Decrease capital expenditures
C. Increase long-term debt
D. 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 operation
Cash used for investing
Cash used for financing
Total change in cash
Cash at beginning of period
Cash at end of period
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
Cash used for investing
Cash used for financing
Total change in cash
Cash at beginning of period
Cash at end of period