PPT Slide
How would increases in these items affect the AFN?
- Higher dividend payout ratioIncrease AFN : Less retained earnings.
- Higher profit marginDecrease AFN: Higher profits, more retained earnings.
- Higher capital intensity ratio, A/SIncrease AFN: Need more assets for given sales increase.
- Pay suppliers in 60 days rather than 30 daysDecrease AFN: Trade creditors supply more capital, i.e., L*/S increases.