If a Firm Has Excess Capacity When Calculating AFN (Additional

question 24

Multiple Choice

If a firm has excess capacity when calculating AFN (Additional Funds Needed) , A* will most likely equal which of the following?

• A) Total Assets
• B) Current Assets
• C) Fixed Assets
• D) Lumpy Assets

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Definitions:

Negotiability

Refers to the feature of a financial instrument which allows it to be transferred from one party to another in a legal manner, typically without endorsement or delivery.

Blank Indorsement

A signature by the holder on the back of a negotiable instrument, such as a check, without specifying a particular endorsee, thereby making the instrument payable to the bearer.

Qualified Indorsement

An indorsement on a negotiable instrument in which the indorser disclaims any contract liability on the instrument; the notation “without recourse” is commonly used to create a qualified indorsement.

Restrictive

Imposing limitations or conditions on use, action, or movement.