When we use the AFN formula to forecast the additional funds needed,we are implicitly assuming that all financial ratios are constant.This means,for example,that if you plotted a graph of inventories versus sales,the regression line would be linear and would have a positive (non-zero) Y-intercept.

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Quizplus · Accepted Answer

The statement is not true; the AFN formula assumes that all financial ratios are constant except for the one being analyzed, and does not require a linear regression line with a positive Y-intercept for inventories versus sales.

When We Use the AFN Formula to Forecast the Additional