term "additional funds needed (AFN)" is generally defined as follows:
A) Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations.
B) The amount of assets required per dollar of sales.
C) The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth.
D) A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant.
E) Funds that are obtained automatically from routine business transactions.

Question

Quizplus · Accepted Answer

Additional funds needed (AFN) refers to the funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations. Option A defines AFN correctly. Option B refers to the asset turnover ratio, Option C refers to the internal growth rate, Option D refers to the percent of sales method, and Option E refers to spontaneous funds.

Term "Additional Funds Needed (AFN)" Is Generally Defined as Follows