Additional Funds Needed (AFN) Calculator
Use this AFN calculator to estimate whether growth creates a funding gap. Enter the expected change in assets, change in liabilities, and change in retained earnings, and we’ll compute the additional funds needed using: AFN = ΔAssets − ΔLiabilities − ΔRetained earnings.
Last updated: January 2026
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Increase in total assets for the period (ending assets − beginning assets).
Increase in liabilities that will fund growth (e.g. accounts payable, short-term debt).
Increase in retained earnings expected to be reinvested into the business.
Result
Additional funds needed (AFN)
$200,000
AFN = ΔAssets − ΔLiabilities − ΔRetained earnings
Δ Assets
$500,000
Δ Liabilities
$250,000
Δ Retained earnings
$50,000
Positive AFN suggests a funding gap: projected asset growth is larger than internally generated funds plus liability growth.
What This Calculator Tells You
Interpretation
AFN > 0 → potential shortfall
Interpretation
AFN < 0 → potential surplus
Best next step
Validate with a cash flow forecast
Quick Example Result
If ΔAssets = $500,000, ΔLiabilities = $250,000, and ΔRetained earnings = $50,000:
In this scenario, the plan implies a funding gap of about $200,000.
How to Calculate Additional Funds Needed
AFN is a compact way to compare what growth demands (usually more assets) versus what growth can finance internally. It’s commonly used as an early-stage planning metric when you’re setting targets for revenue, inventory, receivables, and operating financing.
AFN equation
AFN = ΔAssets − ΔLiabilities − ΔRetained earningsThink of it as: what you need minus what you can fund.
Step-by-step method
- Estimate the change in assets required to support the plan (inventory, receivables, equipment, cash buffers, etc.).
- Estimate the change in liabilities that will naturally grow or that you intend to use (payables, accrued expenses, borrowing).
- Estimate the change in retained earnings you expect to keep in the business (net income minus dividends/distributions).
- Compute AFN. If AFN is positive, you may need additional financing. If negative, the plan may be self-funded (under these assumptions).
A practical note on timing
AFN is a single-number estimate for a period. In real life, cash can be tight even when AFN looks fine (e.g. when customers pay slowly). If you’re making a financing decision, pair AFN with a month-by-month cash flow forecast.
Frequently Asked Questions
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