Significance of the term additional funds needed

Question

What is the significance of the term additional funds needed?

Answer 1

Once the pro forma balance sheet is finished, total liabilities, equity and total assets will hardly ever match.

The difference between forecasted liabilities, equity and assets results then either too little or too much financing is estimated for the asset amount growth.  The difference is called additional funds needed (AFN), and then forecast assets exceed forecast liabilities and equity, and excess financing is needed when forecast liabilities and equity exceed forecast assets.