When We Use the AFN Equation to Forecast the Additional

question 28

True/False

When we use the AFN equation to forecast the additional funds needed (AFN),we are implicitly assuming that all financial ratios are constant.If financial ratios are not constant,regression techniques can be used to improve the financial forecast.

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Definitions:

Periodic Depreciation Expense

The allocated portion of the cost of a tangible asset over its useful life, recognized as an expense in a specific accounting period.

Double Declining-Balance Method

A method of accelerated depreciation where an asset's value is reduced at double the rate of its straight-line depreciation.

Computer System

An integrated setup of hardware, software, and network components designed to process, manage, and store data.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since its acquisition, representing the cumulative reduction in the asset's value.