The External Funds Needed (EFN) equation does not measure the:
A)additional asset requirements given a change in sales.
B)additional total liabilities raised given the change in sales.
C)rate of return to shareholders given the change in sales.
D)net income expected to be earned given the change in sales.
E)None of the above.

Question

Quizplus · Accepted Answer

The External Funds Needed (EFN) equation is used to determine the additional financing needed to support a company's growth based on a projected increase in sales. It considers the increase in required assets, such as inventory and accounts receivable, as well as the increase in spontaneous liabilities, such as accounts payable and accruals. However, it does not measure the rate of return to shareholders or the net income expected to be earned given the change in sales.

The External Funds Needed (EFN) Equation Does Not Measure The