Which of the following best defines the term "additional funds needed (AFN)"?
A)funds that are obtained automatically from routine business transactions
B)funds that a firm must raise externally from nonspontaneous sources, i.e., by borrowing or by selling new stock to support operations
C)the amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth
D)a forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant

Question

Quizplus · Accepted Answer

Additional funds needed (AFN) refer to the amount of funds that a firm must raise externally from nonspontaneous sources (borrowing or issuing new stock) to support its operations due to an increase in financial requirements as a result of growth. Therefore, option B is the correct definition of AFN. Options A, C, and D are not accurate definitions of AFN.

Which of the Following Best Defines the Term "Additional Funds