Adjust the Cash Balance

We obtain the following $2020$ forecasts of selected financial statement line items for Journey Company.

$ millions $2019$ Actual $2020$ Est.

Net Sales $$708,554$ $$740,439$

Marketable securities $67,09662,096$

Long$-$term debt $346,558308,437$

Treasury stock $($deducted from equity$)51,17451,174$

Cash generated by operations $57,696$

Cash used for investing $(14,908)$

Cash used for financing $(54,660)$

Total net change in cash $(11,872)$

Cash at beginning of period $51,141$

Cash at end of period $$39,269$

Note: Complete the entire question in Excel using the following template: Excel Template. Excel calculations should be unrounded. Format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places.

a$.$ Does forecasted cash deviate from the normal level for this company?

Calculate the company's normal cash level as a percentage of sales.

Normal cash as a $\%$ of sales

Answer $1$

$7\mathrm{.}2$

Using the answer above, compute what should be the normal cash balance for FY$2020.$

Normal cash balance for FY$2020$

Answer $2$

$53,459\mathrm{.}7$

b$.$ Is the deviation in part a large enough to require adjustment? Explain.

Answer $3$

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?

Answer $4$

Decrease capital expenditures

d$.$ Complete the following statement of cash flows assuming long$-$term debt is used to adjust the forecasted cash balance.

Statement of Cash Flows

Cash generated by operations Answer $5$

$57,696$

Cash used for investing Answer $6$

$(14,908)$

Cash used for financing Answer $7$

$(40,469)$

Total change in cash Answer $8$

$2,319$

Cash at beginning of period Answer $9$

$51,141$

Cash at end of period Answer $10$

$53,460$

e$.$ Complete the following statement of cash flows assuming marketable securities are used to adjust the forecasted cash balance.

Statement of Cash Flows

Cash generated by operations Answer $11$

$57,696$

Cash used for investing Answer $12$

$(14,908)$

Cash used for financing Answer $13$

$(54,660)$

Total change in cash Answer $14$

$2,319$

Cash at beginning of period Answer $15$

$51,141$

Cash at end of period Answer $16$

$53,460$a$.$ Does forecasted cash deviate from the normal level for this company?

Calculate the company's normal cash level as a percentage of sales.

Normal cash as a $\%$ of sales

Using the answer above, compute what should be the normal cash balance for Fv$2020.$

Normal eash balance for FY$2030$

b$.$ Is the deviation in part a large enough to require adjustment? Explain.

Yes. The deviation is large enough to require an adjustment.

c$.$ Identify three wrays to adjust the forecasted cash balance.

Which option would least likely be used to adjust the cash balance?

d$.$ Complete the following statement of cash flows assuming long$-$term debt is used to adjust the forecasted cash balance.

e$.$ Complete the following statement of cash flows assuming marketable securities are used to adjust the forecasted cash balance.