A Company Expects Sales to Increase During the Coming Year,and

question 3

Multiple Choice

A company expects sales to increase during the coming year,and it is using the AFN equation to forecast the additional capital that it must raise.Which of the following conditions would cause the AFN to increase?

• A) The company previously thought its fixed assets were being operated at full capacity,but now it learns that it actually has excess capacity.
• B) The company increases its dividend payout ratio.
• C) The company begins to pay employees monthly rather than weekly.
• D) The company's profit margin increases.
• E) The company decides to stop taking discounts on purchased materials.

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Definitions:

Arena

A place or scene of activity, debate, or conflict.

Unsold Seats

Refers to seats in venues such as theaters, airplanes, or sports stadiums that remain unoccupied because they were not purchased or reserved.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not influence ongoing decision-making processes.

Remodeling

The process of improving, updating, or altering the structure or layout of a building to enhance its appearance or functionality.