Which of the Following Assumptions Is Embodied in the AFN

question 42

Multiple Choice

Which of the following assumptions is embodied in the AFN equation?

• A) Accounts payable and accruals are tied directly to sales.
• B) Common stock and long-term debt are tied directly to sales.
• C) Fixed assets, but not current assets, are tied directly to sales.
• D) Last year's total assets were not optimal for last year's sales.
• E) None of the firm's ratios will change.

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Definitions:

Direct Orders

The result of direct marketing offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction.

Prospective Buyer

An individual or entity showing interest in purchasing a product or service, often considered a potential customer in the sales process.

Transaction

The act of conducting business or commercial exchanges between two parties, involving the transfer of goods, services, or funds.

Direct Marketing

A form of advertising where businesses communicate directly with consumers through various media channels to sell products or services.