Non-spontaneous financial requirements

Reference no: EM13746676

Suppose a firm makes the following policy changes. If the change means that external, non-spontaneous financial requirements (AFN) will increase, indicate this by a (=); indicate a decrease by a (=); and indicate indeterminate or no effect by a (0) think in terms of the immediate, short-run effect on funds requirements.

a. The dividend payout ratio is increased.

b. The firm decides to pay all suppliers on delivery, rather than after a 30-day delay, to take advantage of discounts for rapid payment.

c. The firm begins to sell on credit (previously all sales had been on a cash basis).

d. The firm's profit margin is eroded by increased competition; sales are steady.

Reference no: EM13746676

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