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bv ch 9 q 5

bv ch 9 q 5 - and long term in nature and top support the...

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The chief financial officer of PartsCo has asked you to rerun the forecast of the company’s income statement and balance sheet at a growth rate of 5 percent. If the company generates more cash than it needs, how can the balance sheet be adjusted to handle this? What alternatives exist to handle new cash? In order to rerun the forecast and to which it generates surplus cash, the same can be adjusted in the balance sheet by creating a reserve against the excess cash. This is beneficial for the company as the excess cash generated for the company would come in handy for the paying off liabilities of short
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Unformatted text preview: and long term in nature and top support the working capital of the business in order to manage the day to day need of the cash. Apart from the above, there are alternatives for adjusting the excessive cash. As we know, when the excess cash will be pooled in, we can actually adjust our reserves and surplus, or treat it as other income in the profit and loss statement. These two measures can be used as a measure to adjust the cash that will be generated in the event of rerunning of the income and balance sheet statements....
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