Which of the Following Assumptions Is Embodied in the AFN

question 16

Multiple Choice

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

• A) All balance sheet accounts are tied directly to sales.
• B) Accounts payable and accruals are tied directly to sales.
• C) Common stock and long-term debt are tied directly to sales.
• D) Fixed assets,but not current assets,are tied directly to sales.
• E) Last year's total assets were not optimal for last year's sales.

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Definitions:

Government Agencies

Organizations established by a government to carry out specific government functions.

Small Businesses

Enterprises with a small number of employees and relatively low volume of sales.

Horizontal Merger

Merger that joins firms in the same industry for the purpose of diversification, increasing customer bases, cutting costs, or expanding product lines.