4. 30.

EFN [LO 4.2] Define the following:

1. Assuming all debt is constant, show that EFN can be written as follows:
EFN = −PM(S)b + (A − PM(S)b) × g Hint: Asset needs will equal A × g. The addition to retained earnings will equal PM(S)b × (1 + g).

Transcribed Image Text:

S = Previous year's sales A = Total assets E = Total equity