Explain the significance of the term additional funds needed, Financial Management

Assignment Help:

Explain the significance of the term additional funds needed.

When the pro forma balance sheet is finished, total liabilities and total assets and equity will rarely match.  The discrepancy among forecasted assets and forecasted liabilities and equity results when either too much or too little financing is projected for the amount of asset growth expected.  The discrepancy is called as additional funds needed (AFN) when forecast assets go beyond forecast liabilities and excess financing and equity when forecast liabilities and equity exceed forecast assets.

 

 


Related Discussions:- Explain the significance of the term additional funds needed

Calculate the amount invested in treasury bonds, You have an investment cap...

You have an investment capital of $1,000,000.  You plan to invest a portion of this money in Treasury bonds and the remainder in a stock portfolio.  Treasury bonds are expected to

Research and development and marketing costs, a) Product orientated busines...

a) Product orientated businesses tend to be produce products and inward looking that they hope will sell in the marketplace. For example, Sony hoped that its $101,500 audio systems

Determine about the zero interest bonds, Determine about the Zero Interest ...

Determine about the Zero Interest Bonds (ZIBs) Very much alike DDBs, only crucial difference is that these are issued at face values (DDBs are issued at a discount to face valu

Spreads, Spreads The difference between two futures price is referred to...

Spreads The difference between two futures price is referred to as ‘spread'. For the same underlying good, if there are two different prices on two different expiration dates, t

Floating-rate bonds, These were first issued during a period of extre...

These were first issued during a period of extreme interest rate volatility in the late 1970s. Floating-rate bonds, which are also known as variable-rate bonds or simpl

Advent of euro affect international diversification strategy, Explain how t...

Explain how the advent of the euro would affect international diversification strategies. Answer: As the euro-zone will have similar exchange-rate policies and monetary, the co

Determine the investment to maximize the return, Assume that the treasurer ...

Assume that the treasurer of a company has an extra cash reserve of $1,000,000 to invest for six months. The six-month interest rate is 8% per year in the U.S. and 6% per year in G

share-appreciation mortgages (sams), High interest rates in the earl...

High interest rates in the early 1980s brought about this innovative mortgage arrangement. SAMs use inflation as a way of paying for the property. The lender agre

Calculation of wmcc, Q. Calculation of WMCC? The calculation of WMCC re...

Q. Calculation of WMCC? The calculation of WMCC requires several steps to be taken and is subject to the following assumptions: 1) The WMCC is calculated on the basis of market

Describe the benefits of wealth maximisation criterion, Describe the benefi...

Describe the benefits of Wealth maximisation criterion Value of an asset must be viewed in terms of the benefits it can produce. Worth of a course of action can similarly be ju

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd