Quiz Ch 16 – T/F Capital Intensity Ratio and AFN Formula Accuracy

Fundamentals of Financial Management, Concise

Brigham and Houston

09th Edition

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True or false: When a firm's capital intensity ratio (A/S0) decreases as sales rise, the AFN formula is prone to underestimating the required additional funds, assuming constant variables.

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  • Search Terms: a. b. false true (a */s) a additional afn amount as capital constant. decreases firm's formula funds held if increase, intensity is likely of other ratio required, sales the things to understate use
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