The term \"additional funds needed (AFN)\" is generally defined as follows: 2. W

Question

The term "additional funds needed (AFN)" is generally defined as follows:

2. Which of the following statements is CORRECT?

3.

Last year Baron Enterprises had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year. In millions, by how much could Baron's sales increase before it is required to increase its fixed assets?

e. $170.09 show work please

4. Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set?

e. 28.5% show work please

5. In your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year. The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year?

$200,000

$50,000

40%

$15,000

$135,000

$20,000

20.0%

25.0%

a. The amount of assets required per dollar of sales. b. 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. c. Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations. d. A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant. e. Funds that are obtained automatically from routine business transactions.

Explanation / Answer

1)c. Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations

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