Suppose a firm makes the following policy changes. If the change means that external nonspontaneousfinancial requirements (AFN) will increase, indicate this with a (+); indicate adecrease with a (-); and indicate an indeterminate or negligible effect with a (0). Think interms 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 companydecides to produce them only after an order has been received. _____________c. The firm decides to pay all suppliers on delivery, rather than aftera 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 acash basis.) _____________e. The firm’s profit margin is eroded by increased competition; sales aresteady. _____________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 hadpaid employees at the end of each month.) _____________
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.) _____________
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