Quiz Ch 16 – Assumptions in the AFN Equation
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Which assumption is reflected in the AFN (Additional Funds Needed) equation?
Which assumption is reflected in the AFN (Additional Funds Needed) equation?
How is ‘additional funds needed (AFN)’ typically defined?
How is the ‘capital intensity ratio’ typically defined?
Considering all other factors are constant, which of the following is most likely to result in an increase in Jefferson City Computers’ Additional Funds Needed (AFN)?
Which is NOT a fundamental component of strategic planning as outlined in the text?
True or false: To calculate Additional Funds Needed (AFN), subtract the expected increase in liabilities (a source of funds) from the sum of expected increases in retained earnings and assets (both uses of funds).
True or false: In the development of forecasted financial statements, management has control over certain inputs like the growth rate and operating costs/sales ratio, whereas other inputs such as the tax rate and interest rate are beyond its control.
True or false: In most cases, the term “spontaneously generated funds” pertains to rises in the cash balance arising from sales growth, provided that the firm is running with a positive profit margin.
True or false: A conventional sales forecast, despite its focus on future occurrences, typically relies on recent historical patterns, events, and economic outlooks.
True or false: A swift accumulation of inventories typically necessitates extra financing, unless the growth is offset by an equally substantial reduction in some other asset.