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.

---

Definitions:

Market Basket

A selection of goods and services used to track price changes and inflation in an economy, representing the typical purchases made by consumers.

CPI

The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, used as an indicator of inflation.

Market Basket

A selected set of goods and services used to track inflation and the cost of living or to define a beneficiary's set of consumable products.

CPI

The Consumer Price Index is an indicator that assesses the average cost of a selected group of consumer items and services, including food, medical care, and transportation, by looking at their weighted average prices.