Suppose a firm was planning to greatly reduce its raw materials inventory next year by introducing just-in-time inventory control procedures. Assuming no other changes to the firm's operations, what would this do to AFN?
A) It would not change the AFN.
B) The AFN would decrease.
C) The AFN would increase.
D) Unable to determine without knowing the impact on the profit margin.

Question

Quizplus · Accepted Answer

By implementing just-in-time inventory control procedures, the raw materials inventory will be reduced, resulting in a decrease in working capital requirements. This will reduce the AFN needed to support future growth.

Suppose a Firm Was Planning to Greatly Reduce Its Raw