Which one is most correct about AFN (additional fund needed) A. AFN > 0 happens when a firm exhausts internal funds to support its operations. B. Everything else remains unchanged, if a firm’s profit margin is expected to go up, then its AFN is more likely to increase as well. C. If everything else remains unchanged, when a firm increases its plowback ratio, its AFN will increase too. D. Companies with relatively high assets-to-sales ratios require a relatively large amount of new assets for any given increase in sales; hence, they must have a greater need for external financing.
Which one is most correct about AFN (additional fund needed) A. AFN > 0 happens when a firm exhausts internal funds to support its operations. B. Everything else remains unchanged, if a firm’s profit margin is expected to go up, then its AFN is more likely to increase as well. C. If everything else remains unchanged, when a firm increases its plowback ratio, its AFN will increase too. D. Companies with relatively high assets-to-sales ratios require a relatively large amount of new assets for any given increase in sales; hence, they must have a greater need for external financing.
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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Which one is most correct about AFN (additional fund needed)
A.
AFN > 0 happens when a firm exhausts internal funds to support its operations.
B.
Everything else remains unchanged, if a firm’s profit margin is expected to go up, then its AFN is more likely to increase as well.
C.
If everything else remains unchanged, when a firm increases its plowback ratio, its AFN will increase too.
D.
Companies with relatively high assets-to-sales ratios require a relatively large amount of new assets for any given increase in sales; hence, they must have a greater need for external financing.
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