What is the equation to determine the estimated additional funds needed (AFN)?
A) Estimated AFN = Forecasted increase in assets + Forecasted increase in liabilities + Forecasted increase in retained earnings
B) Estimated AFN = Forecasted increase in assets - Financing feedbacks + forecasted increase in retained earnings
C) Estimated AFN = Forecasted increase in assets - Financing feedbacks - spontaneously generated funds
D) Estimated AFN = forecasted increase in liabilities + Financing feedbacks + spontaneously generated funds
E) Estimated AFN = Forecasted increase in assets - Forecasted increase in liabilities - forecasted increase in retained earnings

Question

Quizplus · Accepted Answer

The equation for AFN is:
AFN = (Increase in assets - Increase in spontaneous liabilities - Increase in retained earnings) - Increase in spontaneous assets - Increase in long-term debt.
Simplifying the equation, we get:

AFN = Increase in assets - Increase in liabilities - Increase in retained earnings.

Therefore, the correct equation to determine the estimated additional funds needed (AFN) is:
Estimated AFN = Forecasted increase in assets - Forecasted increase in liabilities - forecasted increase in retained earnings.

What Is the Equation to Determine the Estimated Additional Funds