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Aa Aa E 3. More on the AFN (Additional Funds Needed) equation Fuzzy Button Clothing Company reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 7%. Fuzzy Button expects to maintain its current profit margin of 21% and dividend payout ratio of 10%. The following information was taken from Fuzzy Button's balance sheet: Total assets: Accounts payable: Notes payable: Accrued liabilities: $450,000 $80,000 $30,000 $75,000 Based on the AFN equation, the firm's AFN for the current year is A positively signed AFN value represents: O A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends O A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements O A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth Because of its excess funds, Fuzzy Button Clothing Company is thinking about raising its dividend payout ratio to satisfy shareholders. Fuzzy Button could pay out reholders. Fuzzy Button could pay out of its camings to shareholders without needing to raise any external capital. (Hint: What can Fuzzy Button increase its dividend payout ratio to before the AFN becomes positive?)

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