On the projected balance sheet for the next year,total assets are $5,000,total liabilities are $2000,and shareholder's equity is $1,000.Which of the following is correct?
A) EFR is $1,000. This firm will have a cash deficit.
B) EFR is $1,000. This firm will have a cash surplus.
C) EFR is $2,000. This firm will have a cash deficit.
D) EFR is $2,000. This firm will have a cash surplus.

Question

Quizplus · Accepted Answer

The Equity Financing Requirement (EFR) is calculated as Total Assets minus Total Liabilities minus Shareholder's Equity. Here, EFR = $5,000 - $2,000 - $1,000 = $2,000, indicating a cash deficit.

On the Projected Balance Sheet for the Next Year,total Assets