The funds requirement can be forecasted by theforecasted financial statement approach, but youcould also use the AFN formula. What is thisformula, and how does it work? What are itsadvantages and disadvantages relative to thefinancial statement method?

The funds requirement can be forecasted by theforecasted financial statement approach, but youcould also use the AFN formula. What is thisformula, and how does it work? What are itsadvantages and disadvantages relative to thefinancial statement method?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 6Q: Suppose a firm makes the following policy changes listed. If a change means that external,...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

The funds requirement can be forecasted by the
forecasted financial statement approach, but you
could also use the AFN formula. What is this
formula, and how does it work? What are its
advantages and disadvantages relative to the
financial statement method?

Leveraging special tenchniques in analyzing historical data to predict future trends. Forecasting covers the methods and types of forecasting and their application to case studies.

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Suppose a firm makes the following policy changes listed. If a change means that external, nonspontaneous financial requirements (AFN) will increase, indicate this by a (+); indicate a decrease by a (−); and indicate no effect or an indeterminate effect by a (0). Think in terms of the immediate effect on funds requirements.
If the key ratios are expected to remain constant, the AFN equation can be used toforecast the need for external funds. Write out the equation and explain its logic.
Explain the difference between cash flow statement and fund flow statement and identify why organization use both the statements?
In recognition, an item is captured for inclusion in a. The Fund Flow statement b. The Journal c. The statement of financial position d. All the options are correct
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In applying the current financial resources measurement focus, when are liabilities recognized in fund financial statements?
How do you think the misstatement of funds will impact the income statement and balance sheet?
When evaluating a fund based on its cash-on-cash returns, what other considerations should you keep in mind?
What are the advantages of evaluating fund performance based on Internal Rate of Return (IRR)? Why would an investor prefer to evaluate a fund based on a cash-on-cash return?
Traditional approach to financial management is how the funds can be utilised efectively. Select one: a. True b. False
Which of the following is not a GASB's required statement for proprietary funds? A.) Statement of net position B.) Statement of revenues, expenses, and changes in fund net position C.) Statement of cash flows D.) Statement of changes in fund net position
Answered with short words. Please be specific: What are the limitations/problems from classifying performance using raw returns? and, What are the limitations of using Sharpe Ratio to classify fund performance?