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Simora [160]
3 years ago
8

The AFN equation assumes that the ratios of assets and liabilities to sales remain constant over time. However, this assumption

can be relaxed when we use the forecasted financial statement method. Three conditions where constant ratios cannot be assumed are economies of scale, lumpy assets, and excess capacity.A. TrueB. False
Business
1 answer:
Vera_Pavlovna [14]3 years ago
8 0

Answer:

The answer is A True

Explanation:

AFN which is "additional funds needed" is a concept used commonly in business looking to expand operations and influence. Since a business that seeks to increase its sales level will require more assets to meet that stated goal, some provision must be made to accommodate the change in assets. AFN is a way of calculating how much of new funds will be needed, so that the firm can realistically look at whatever or not they will be able to generate the additional funds and therefore be able to achieve the higher sales level.

Economies of scale are cost advantage reaped by companies when production becomes efficient. Firms can achieve economies of scale by increasing production and lowering cost. This does not involve calculating of new funds needed for a realistic expansion of the firm.

Lumpy assets are assets that cannot be acquired in small increments but must be obtained in large, discrete units.

Excess Capacity indicates to a situation in which the demand for a company's goods and services is less than its production capacity. This situation can arise in any firm during  the low point in a seasonal industry, where capacity is maintained to match the peak part of the season.

A constant ration can not be meet in this condition of economies of scale, lumpy assets, and excess capacity as these conditions  can not be used in raising funds or additional funds that are needed by the industry in its expansion.

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A company had 6,950,000 net income for the year. Is net sales were 14,700,000 for the same period. Calculate its profit margin.
kobusy [5.1K]
0.46 or 46% hope this helps
5 0
3 years ago
Montclair Company is considering a project that will require a $610,000 loan. It presently has total liabilities of $165,000 and
Leya [2.2K]

Answer:

32.35%  or 0.33

151.96%   or 1.52

The new borrowing would make the financing structure more risky since the amount of fixed interest payment would increase significantly

Explanation:

Current debt to equity ratio:

Debt to equity=debt amount/equity amount

Current debt  is $165,000

current equity is $675,000

equity =total assets-debt

debt to equity ratio=$165,000/($675,000-$165,000)=32.35%

If the $610,000 is borrowed ,the debt value would increase by $610,000

new debt value=$165,000+$610,000=$ 775,000.00  

New debt to equity ratio= $775,000.00/$510,000.00=151.96%

6 0
2 years ago
Throughout the course of your life, you have converted some of your cash on hand to certificates of deposit and bonds. You also
Serjik [45]

Answer:

intangible property

Explanation:

Intangible property can be defied as property that doesn't have any physical attributes that give them value. For example, a car is a tangible since you can drive it around, but a certificate of deposit is just a piece of paper (or even a computer code) and nothing else. The same applies to bonds and stocks, you know they are valuable but their value is not provided by their physical characteristics.

Other intangible property include patents, software, licenses, copyrights and trademarks. All of these can be extremely expensive, for example Microsoft is worth hundreds of billions and it sells digital ones and zeros.

4 0
3 years ago
In the context of employee evaluation, most companies require that managers give formal feedback through periodic _____, usually
maria [59]

Answer:

The options for this question are the following:

a. vestibule training

b. management development programs

c. performance appraisals

d. orientation programs

The correct answer is c. performance appraisals .

Explanation:

Performance appraisal is a structural and systematic procedure to measure, evaluate and influence attributes (eg cooperation in teamwork and loyalty), behaviors (eg level of assistance and treatment given to clients) and work-related results (eg quantity and quality of the fruits of work), in order to discover to what extent the employee is productive and whether he will be able to improve his future performance. The performance evaluation process plays a monitoring role in order to:

  • To provide management with information to make decisions regarding the future development of the employee, by identifying and preparing, through training and improvement programs, the most suitable candidates so that they can assume a greater number of responsibilities.
  • Establish the relative value of a subject's contribution to the company and evaluate individual achievements.
  • Provide general data on the expected performance of employees.
  • Structure the dialogue between superior and subordinate, forcing superiors to improve knowledge of the subordinate's job.
  • Be the basis to distribute the remuneration, rewards, bonuses and determine the levels \ salary increases.
8 0
2 years ago
Read 2 more answers
You are the CFO of a major pharmaceutical firm. A division manager has presented senior management with an investment opportunit
DochEvi [55]

Answer: $2.1 million

Explanation:

It is mentioned the project is independent of the outcome of general market  which means that

=> beta = 0

Using the CAPM formula which is,

r=rt + B* (rm -rf)

=> r = 3% + 0*(12%-3%) = 3%

Expected value of Project in one year = $1 billions * 0.1

Expected value of Project in one year = $100 millions

NPV = Expected value of Project in one year/ (1 + 0.03) - Initial cost

NPV = 100/ (1 + 0.03) - 95

NPV = 97.1 - 95

NPV = $2.1 million

4 0
3 years ago
Read 2 more answers
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