What is the Additional Funds Needed (AFN) Calculator?
The Additional Funds Needed (AFN) Calculator helps businesses determine the extra funding required to support their expected growth. It estimates how much external financing a company will need to meet future operational and investment demands, based on projected sales growth, current financial data, and planned expenses.
Formula:
AFN = (Assets/Sales) × ΔSales − (Liabilities/Sales) × ΔSales − Profit Margin × Projected Sales × (1 − Dividend Payout Ratio)
How to Use This Calculator:
1. Enter current sales, expected sales growth percentage, current assets, and current liabilities.
2. Provide the profit margin and dividend payout ratio.
3. Click "Calculate" to see the Additional Funds Needed.
4. Use "Clear" to reset the inputs.
Calculator
Frequently Asked Questions (FAQs)
1. What is Additional Funds Needed (AFN)?
AFN refers to the extra financing a company needs to support its expected growth. It considers current assets, liabilities, projected sales, and profitability.
2. Why is AFN important for businesses?
Calculating AFN helps companies plan their financing needs, avoid liquidity issues, and ensure smooth operations during expansion.
3. What data is required for AFN calculation?
You need current sales, expected growth, assets, liabilities, profit margin, and dividend payout ratio.