Asked by Mackenzie Kiernan on May 27, 2024
Verified
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.
Financial Ratios
Quantitative measures derived from financial statement analysis used by stakeholders to evaluate a company's financial performance and health.
AFN Formula
The Additional Funds Needed (AFN) formula is used to determine the additional amount of external financing a company will need for future growth and expansion.
- Familiarize yourself with the principles and implementations of the Additional Funds Needed (AFN) formula.
Verified Answer
SK
Shahbaz KhosoMay 28, 2024
Final Answer :
False
Explanation :
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.
Learning Objectives
- Familiarize yourself with the principles and implementations of the Additional Funds Needed (AFN) formula.
Related questions
Jefferson City Computers Has Developed a Forecasting Model to Estimate ...
Which Assumption Is Embodied in the AFN Formula Forecasting Method ...
Use the Following Information to Calculate the Net Cash Provided ...
If You Want to Purchase an Annuity Providing an Income ...
Accounts Receivable Arising from Sales to Customers Amounted to $86000 ...