Most financial officers know intuitively that it takes money to make money. Rapid sales growth requires increased
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Question:
Most financial officers know intuitively that it takes money to make money. Rapid sales growth
requires increased assets, which in turn, require money to pay for assets. In this context, explain
the key determinants of external financing needed (EFN), and make excess capacity adjustments
to both the EFN equation and projected financial statement methods. If the company is operating
at full capacity, how will this affect the EFN?
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