The term "additional funds needed (AFN)" is generally defined as follows:

a. The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth.

b. The amount of assets required per dollar of sales.

c. A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant.

d. Funds that are obtained automatically from routine business transactions.

e. Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations.