Which of the following assumptions is embodied in the AFN equation?
A) accounts payable and accruals are tied directly to sales.
B) common stock and long-term debt are tied directly to sales.
C) fixed assets, but not current assets, are tied directly to sales.
D) last year's total assets were not optimal for last year's sales.
E) none of the firm's ratios will change.

Question

Quizplus · Accepted Answer

Accounts payable and accruals are tied directly to sales because they are both short-term liabilities that are incurred as a result of the firm's sales activities.

Which of the Following Assumptions Is Embodied in the AFN