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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
16-5Â Â Â Â Â Suppose a firm makes the following policy changes. If the change means that external nonspontaneous financial requirements (AFN) will increase, indicate this with a (+),
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indicate a decrease with a (-), and indicate an indeterminate or negligible effect with a (0). Think in terms of the immediate short-run effect on funds requirements.
a.      Â
The dividend payout ratio is increased.
b.      Rather than produce computers in advance, a computer company
decides to produce them only after an order has been received.                        Â
c.      Â
The firm decides to pay all suppliers on delivery, rather than after a 30-day delay, to take advantage of discounts for rapid payment.
d.     Â
The firm begins to sell on credit. (Previously, all sales had been on a cash basis.)
e.      Â
The firm’s profit margin is eroded by increased competition; sales are steady.
f.       Â
Advertising expenditures are stepped up.
g.     Â
A decision is made to substitute long-term mortgage bonds for short-term bank loans.
h.     Â
The firm begins to pay employees on a weekly basis. (Previously it had paid employees at the end of each month.)
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