Rethinking Retained Earnings in the Additional Funds Needed Formula
Year: 2025
Type: article
Abstract: This paper critically re-evaluates the traditional application of the Additional Funds Needed formula by analyzing alternate interpretations of retained earnings. It illustrates how definitional shifts influence capital forecasts with a more nuanced approach to financial modeling in growth scenarios. The approach emphasizes numerical clarity, policy realism, and adaptability for financial planning. The paper challenges conventional AFN usage by embedding definitional flexibility and temporal awareness, offering decision-makers clearer visibility into funding sensitivity. It reframes AFN as a dynamic planning tool rather than a static formula, with implications for forecasting, policy-setting, and strategic finance.
Author: James E. Larsen
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7082631694
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