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Suppose Green Moose's assets are fully utilized. Usingthe additional funds needed (AFN) equation, the increase in total assets that is necessary to support Green Moose
Suppose Green Moose's assets are fully utilized. Usingthe additional funds needed (AFN) equation, the increase in total assets that is necessary to support Green Moose Industries's expected sales is $510,000 . When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Green Moose this year? $61,200 $54,400 $78,200 $68,000 Now, Green Moose expects to generate a positive net income next year, and to distribute some of its earnings as dividends. It will retain the remainder of the firm's forecasted net income (as retained earnings) for future asset investment. As the company generates more internal funding, it will have less to raise externally via the capital markets. Assuming that, next year, Green Moose's net profit margin and dividend payout ratio will be the same as this year's values, then Green Moose is expected to generate $ of additional retained earnings financing. According to the financial forecasts for Green Moose Industries and the AFN equation, next year, the firm will need to raise in additional external financing
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