Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year.All else being equal,which factor is most likely to lead to an increase of the additional funds needed?
A)a sharp increase in its forecasted sales
B)a sharp reduction in its forecasted sales
C)a reduction in its dividend payout ratio
D)excess capacity in its fixed assets

Question

Quizplus · Accepted Answer

A sharp increase in forecasted sales will likely increase the additional funds needed. This is because the company will need to finance the additional assets and operating expenses required to support the higher level of sales.

Jefferson City Computers Has Developed a Forecasting Model to Estimate