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QUESTION 3 Partially correct Mark 1.97 out of 3.50Flag question Adjust the Cash Balance We obtain the following 2018 forecasts of selected financial statement line
QUESTION 3 Partially correct Mark 1.97 out of 3.50Flag question Adjust the Cash Balance We obtain the following 2018 forecasts of selected financial statement line items for Journey Company $ millions Net Sales Marketable securities Long-term debt Treasury stock (deducted from equity) Cash generated by operations Cash used for investing Cash used for financing Total net change in cash Cash at beginning of period Cash at end of period 2017 Actual 2018 Est. $771,331 $803,216 67,096 62,096 346,558 308,437 51,174 51,174 58,029 (15,241) (54,327) (11,539) 51,141 $39,602 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. 6.6 Using the rounded answer above, compute what should be the normal cash balance for FY2018 Round answer to the nearest million 0.005 x 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. Mark 1.00 out of 1.00 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 Mark 1.00 out of 1.00 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 Cash used for investing Cash used for financing 58,029 (15,241)V (54,327)x Total change in cash (11,539) X Cash at beginning of period 51,141 Cash at end of period 53,012.26 x 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 operation:s Cash used for investing Cash used for financing $58,029 78 X (54327) Total change in cash Cash at beginning of period 51,141 Cash at end of period $53,012.26 X
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