Question

When forecasting, why would we want to use the AFN (Additional Funds Needed) equation with all industry types?

Answer 1

AFN = Additional Fund Needed

It is a concept used by business which is looking to expand its operation, ot looking ways to increase its sales through various means.

It is the amount of money that the Company must raise from external sources in order to increase their assets that is able to support the goal of incresing sale

Eg .- If a company wants to increase its sale , it must produce more products to be sold and in order to produce more products, company will be required to purchase more efficient and new machine or additional palnt and machines to produce more.

In any industry, whether it be transport,computer,agriculture,construction etc, AFN (Additional Fund Needed) is required in order to meet the goal of the organization to increase sale.

Provisions to be made to change the asset in order to meet the goals of the oraganization is to be made.