6. Factors that affect the AFN equation Several factors affect a firm's need for external 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. Management has decided that the firm needs to keep more inventory on hand throughout the year. The firm's forecasted sales are unexpectedly increased. The firm improves its production system and increases its profit margin