From the course: Forecasting Using Financial Statements

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Make adjustments

Make adjustments

From the course: Forecasting Using Financial Statements

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Make adjustments

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- [Instructor] As you can see, we have an issue with the current assets. Negative cashflow is not appealing to investors. So while it's okay for a growing company to have limited cashflow or a little bit of cashflow, nobody really likes to see the red. So let's make some adjustments in our predictions in 03_08_BS_Begin. It seems like a lot of cash is going toward purchasing PP&E, which I can see in row 16 here. It may be in our best interest then to say, perhaps, investing in that much property and equipment is not a good idea. On the other hand, if we're predicting growth and Richards will definitely need to invest in equipment, we can look into getting more loans. If we increase the amount of liabilities we have in accordance with the accounting equation, we can also increase our assets, so let's do that. I'm going to pretend that we have great credit and we can increase our loan amount. So maybe we can take out loans for the extra projected PP&E. So for projected 2019 in column E…

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