Answer:
The forecasted cash is lower than the normal level (5.3% vs 7.22% of total sales). This results in a -26.59% change in the normal cash level.
Explanation:
2017 Actual 2018 Est. Net
Sales $708,554 $740,439
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 57,696
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
the normal cash level for this company = $51,141 (ending cash 2017 or beginning cash 2018) / $708,554 (total sales 2017) = 7.22%
the cash level for 2018 = $39,269 (budgeted cash at end of 2018) / $740,439 (budgeted total sales 2018) = 5.3%
so the forecasted cash is lower than the normal level (5.3% vs 7.22% of total sales)
the percent change = (5.3% - 7.22%) / 7.22% = -26.59%
