Business finance

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

Simple AFN equation for a quick funding “gap check”
Interprets positive vs negative AFN
Works with decreases (negative changes) too

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Additional Funds Needed Calculator
Estimate how much extra financing you may need to support growth using the AFN equation.

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

Funding gap estimate
A positive AFN suggests the business may need outside funding to support the plan.

Interpretation

AFN > 0 → potential shortfall

Self-funded growth
A negative AFN suggests internal funding plus liability growth covers the asset increase.

Interpretation

AFN < 0 → potential surplus

Assumption check
AFN is sensitive to assumptions. Use it to sanity-check a plan before deeper modeling.

Best next step

Validate with a cash flow forecast

Quick Example Result

If ΔAssets = $500,000, ΔLiabilities = $250,000, and ΔRetained earnings = $50,000:

AFN$200,000

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 earnings

Think of it as: what you need minus what you can fund.

Step-by-step method

  1. Estimate the change in assets required to support the plan (inventory, receivables, equipment, cash buffers, etc.).
  2. Estimate the change in liabilities that will naturally grow or that you intend to use (payables, accrued expenses, borrowing).
  3. Estimate the change in retained earnings you expect to keep in the business (net income minus dividends/distributions).
  4. 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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