Which of the following defines the term "additional funds needed (AFN)"?
A) funds that are obtained automatically from routine business transactions.
B) funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock, to support operations.
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.

Question

Quizplus · Accepted Answer

Additional funds needed (AFN) refers to the amount of funds that must be raised by a company through external sources like borrowing or selling new stock to support its operations. This usually occurs when a company's internal financing is insufficient to support its growth plans or when it is faced with unexpected expenses. The other options (A, C, and D) are not accurate definitions of AFN.

Which of the Following Defines the Term "Additional Funds Needed