Reference no: EM132664408

The forecast of the income statement and balance sheet for Next Generation yields the following.

$ million                                                                                                               s 2017 Actual           2018 Est.

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,558                     $ 6,127

Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,668                    43,552

Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,980                          5,980

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,930                        21,485

Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,561)                         (4,811)

Required

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

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

Problem c. Suggest three ways to adjust the forecasted cash balance.

Problem d. If we used marketable securities to adjust the cash balance, what would be the adjusted forecast for marketable securities?

Problem e. If we used treasury stock to adjust the cash balance, what would be the adjusted forecast for treasury stock?