Sand & Gravel Enterprises

Elements of AFN Mean

RCRM TOMDEAL YUSON
Assets (Ao) 6,419,000 22,125,000 133,350,000 53,965,000
Sales current year (S0) 15,360,000 44,400,000 124,200,000 61,320,000
Forecasted Sales (S1) 16,865,280 49,950,000 137,862,000 68,225,760
Change in Sales (∆S) 1,505,280 5,550,000 13,662,000 6,905,760
(S1-S0)
Spontaneous Liabilities (L0) 2,442,000 17,436,000 26,146,400 15,341,470
Retention Ratio (b) 55% 75% 60% 62%
Profit Margin (PF) 5% 5% 5% 5%

After solving for the sales forecast of the respondents, the next step will then be the
calculation of the AFN formula. The table above show the elements of the AFN formula with the
corresponding amounts for each company.

To be able to compute for the AFN of the 3 enterprise, the mean for element of the AFN
is derived. The average amounts were the figure used in calculating the AFN for sand and gravel
enterprise.

AFN = {(Ao/So)∆S} – {(Lo/So)∆S} – ( S1xbxPF)

= {(53,965,000/61,320,000)6,905,760}-
{(15,431,470/61,320,000)6,905,760}-
(68,225,760 x 80% x 5%)
AFN = PHP 2,224,585.754