ADDITIONAL FUNDS NEEDED Suppose Weatherford’s financial consultants report (1) that the inventory turnover ratio is Sales Inventory 3 times versus an industry average of 4 times and (2) that Weatherford can reduce inventories and thus raise its turnover to 4 without affecting sales, the profit margin, or the other asset turnover ratios. Under those conditions, use the AFN equation to determine the amount of additional funds Weatherford will require next year if sales grow by 20%.

AppendixLO1