Attempts Keep the Highest / 2 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. The firm previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity The firm's forecasted sales are unexpectedly increased The firm's inventory turnover decreases, with no effect on the sales forecast Dividends to common shareholders are paid out of after tax earnings. Do these payouts affect afirm's AIN? O No, dividends do not affect a fum's AFN, because they are paid out of after tax earnings O Yes, dividends still affect a firm's AFN even though they are paid out of after-tax earnings