Additional Funds Needed Calculator
Use our additional funds needed calculator to estimate how much external financing a business may need based on changes in assets, liabilities, and retained earnings. Includes what additional funds needed (AFN) means, the additional funds needed formula, and a simple example.
What Is Additional Funds Needed?
Additional funds needed (often abbreviated AFN) is an estimate of how much outside financing a company may need to support growth. It compares the increase in assets required for growth against the internal financing available from increased liabilities and retained earnings.
You’ll also see this concept called external funds needed. If the result is positive, it suggests you may need extra funding (debt, equity, or other financing). If the result is negative, it suggests you may have excess funds (or less need for external financing).
This calculator uses a simplified AFN approach based directly on changes in assets, liabilities, and retained earnings.
Additional Funds Needed Formula
In this simplified model, additional funds needed equals the change in assets minus the change in liabilities minus the change in retained earnings.
A positive AFN indicates a need for external financing; a negative AFN indicates a surplus.
Result: the company may need $50,000 in additional funding.
Result: financing sources exceed asset needs by $10,000 (a surplus).
How to Calculate Additional Funds Needed
- 1
Enter the change in assets (Assets) over the period (for example, projected next year minus current year).
- 2
Enter the change in liabilities (Liabilities) over the same period.
- 3
Enter the change in retained earnings (Retained Earnings) expected over the period.
- 4
The calculator computes AFN = Assets − Liabilities − Retained Earnings.
Frequently Asked Questions
Additional funds needed (AFN) is an estimate of how much external financing a company may need to fund growth, based on how much assets must increase compared with internal financing sources.
Using this model: AFN = Assets − Liabilities − Retained Earnings.
External funds needed is often used interchangeably with additional funds needed. In this calculator, it’s the same AFN result: Assets − Liabilities − Retained Earnings.
A negative AFN suggests internal financing sources (liability increases and retained earnings) are enough to cover the needed asset increase, leaving a surplus or no need for outside funding.
No. AFN is a quick estimate. For real decisions, companies typically build a full forecast (sales, margins, working capital, capex, debt terms, etc.).