Which of the following can be computed as: necessary increase in assets minus spontaneous increase in liabilities minus projected increase in retained earnings?
A) Additional funds needed
B) Capital intensity ratio
C) Current ratio
D) Spontaneous assets

Question

Quizplus · Accepted Answer

The formula described is used to calculate the Additional Funds Needed (AFN). AFN is a financial measure that estimates the amount of external financing a company will need to support its expected growth. It takes into account the necessary increase in assets to support sales growth, the spontaneous increase in liabilities that naturally comes with that growth, and the projected increase in retained earnings that can finance some of the growth.

Which of the Following Can Be Computed As: Necessary Increase