5. Using regression analysis to forecast assets The Afv equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a litile more difficult than that. In particulas, some firms use regression analysis to predict the required assets needed to support a given level of sales. General Forge and Foundry Co. has used its histocical sales and asset data to estimate the following regression equations: General forge and Foundry Co. currendy has sales of $922,000, but ti expects sales to grow by 15% over the next year. Use the regression models to calculate Gieneral forge and foundry Cais forecasted values for sccourts receivable and inventories needed to support next years sales, Elased on the neat year's accounts rocenable and inventory levels predicted by General forge and Foundry Co,'s regression cquabons, the firm's bso for neit year in expected to be Use 365 days as the length of o year in all calculations. Several factors affect a firm's need for extemal funds. Evaluate the effect of each following factor and place a check next to each factor that is likely to increase a firm's need for external capital-that is, its. AFN (additional funds needed). Check all that apply. The firm increases its dividend payout ratio. The firm's inventory turnover decreases, with no cffect on the sales forecast. The firm was planning on expanding its production facility, but its management recently decided that the expansion was not necessary Dividends to common shareholders are paid out of after tax earnings. Do these payouts affect a firm's AFN? No, dividends do not affect a firm's AfN, beciusc they are paid out of after tax earnings. Yes, dividends still affect a firm's AFN even though they are pad out of after-tax earmings