Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Chapter 9, Problem 3Q

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To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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A comparative balance sheet and income statement is shown for Cruz, Incorporated. CRUZ, INCORPORATED Comparative Balance Sheets At December 31 2021 2020 Assets Cash Accounts receivable, net $ 85,600 36,800 $ 21,300 Prepaid expenses Inventory Total current assets Furniture Accumulated depreciation-Furniture Total assets Liabilities and Equity Accounts payable Wages payable 77,100 45,200 84,900 4,700 3,900 204,200 155,300 94,700 (14,700) $ 284,200 $ 13,400 8,000 (8,400) $ 257,400 $ 19,000 4,500 110,500 Income taxes payable 1,400 2,500 Total current liabilities Notes payable (long-term) Total liabilities Equity Common stock, $5 par value Retained earnings 22,800 26,000 28,900 66,400 51,700 92,400 204,000 28,500 162,300 2,700 Total liabilities and equity $ 284,200 $ 257,400 CRUZ, INCORPORATED Income Statement Sales For Year Ended December 31, 2021 $ 440,700 283,700 157,000 Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Income before taxes…

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Chapter 9, Problem 3Q

Summary Introduction

To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Chapter 9, Problem 3Q

Summary Introduction

To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Chapter 9, Problem 3Q

Summary Introduction

To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Chapter 9, Problem 3Q

Summary Introduction

To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Chapter 9, Problem 3Q

Summary Introduction

To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Chapter 9, Problem 3Q

Summary Introduction

To discuss: Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

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Key assumption on which AFN equation is based and some conditions this assumption does not hold true.

Solution Summary: The author explains that the AFN equation gives accurate forecasts of financial requirements if the ratios are stable, pay-out and profit margin is stable. If economies of scale, excess capacity or lumpy assets are required, the forecast

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