Textbook Problem

Suppose a firm makes the following policy changes. If the change means that external nonspontaneous financial requirements (AFN) will increase, indicate this with a (+); indicate a decrease with a (−); and indicate an indeterminate or negligible effect with a (0). Think in terms of the immediate short-run effect on funds requirements.

a. The dividend payout ratio is increased.	__________
b. Rather than produce computers in advance, a computer company decides to produce them only after an order has been received.	__________
c. The firm decides to pay all suppliers on delivery, rather than after a 30-day delay, to take advantage of discounts for rapid payment.	__________
d. The firm begins to sell on credit. (Previously, all sales had been on a cash basis.)	__________
e.The firm’s profit margin is eroded by increased competition; sales are steady.	__________
f. Advertising expenditures are stepped up.	__________
g. A decision is made to substitute long-term mortgage bonds for short-term bank loans.	__________
h. The firm begins to pay employees on a weekly basis. (Previously, it had paid employees at the end of each month.)	__________