Which of the Following Statements Is Most Correct

question 2

Multiple Choice

Which of the following statements is most correct?

• A) Inherent in the AFN formula is the assumption that each asset item must increase in direct proportion to sales increases and that spontaneous liability accounts also grow at the same rate as sales.
• B) If a firm has positive growth in its assets, but has no increase in retained earnings, AFN for the firm must be positive.
• C) Using the AFN formula, if a firm increases its dividend payout ratio in anticipation of higher earnings, but sales actually decrease, the firm will automatically experience an increase in additional funds needed.
• D) Higher sales usually require higher asset levels. Some of the increase in assets can be supported by spontaneous increases in accounts payable and accruals, and by increases in certain current asset accounts and retained earnings.
• E) Dividend policy does not affect requirements for external capital under the AFN formula method.

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Definitions:

Project Debriefing

A meeting or report summarizing the outcomes, challenges, and lessons learned upon the completion of a project.

Content Writing

The creation and sharing of online material, such as blogs, social media posts, and videos, aimed at stimulating interest in a brand or product.

Harmonizer

A Harmonizer in a team or group context seeks to reduce conflict and enhance cooperation among members, ensuring smoother interactions and progress.

Meeting Productivity

The effectiveness and efficiency of a meeting in achieving its objectives.