The following equation is sometimes used to forecast financial requirements AFN (A0 S0) (S) (L0 S0) (S) MS1 (1 POR) What key assumption do we make when using this equation Under what conditions might this assumption not hold true ...

The equation gives good forecasts of financial requirements if the ra ...

The following equation is sometimes used to forecast financial requirements: AFN = (A0/S0) (S) (L0/S0) (S)

Question:

The following equation is sometimes used to forecast financial requirements:
AFN = (A0*/S0) (ΔS) – (L0*/S0) (ΔS) – MS1 (1 – POR)
What key assumption do we make when using this equation? Under what conditions might this assumption not hold true?