Subtract the cost of goods sold, operating expenses, interest paid and other expenses to project the net future earnings. Subtract dividends that will be paid to estimate retained earnings. Subtract the sum of the liabilities and equity section from total assets to find the EFN.Click to see full answer. Keeping this in view, what is EFN in finance?External Financing Needed (EFN) = Increase in Assets – Increase in Liabilities – Retained Income.Likewise, how do you calculate external financing? Calculate External Financing Needed Subtract the company’s projected working capital needs and capital expenditures from net income to determine the amount of external financing needed. In this example, the company will need to raise $44 – $18 – $32 = ($6), which means $6 in external financing is needed. Hereof, what is the EFN formula? Instead of preparing a set of forecasted financial statements, you can also calculate your external financing needs (EFN) by using a formula that looks at three changes: Formula = (A/S) x (Δ Sales). 2. Required increases to liabilities given a change in sales.What is the meaning of a positive EFN?A positive EFN will typically be the case if the firm is operating at capacity since internally generated funds (i.e., the addition to retained earnings from the pro forma income statement) will usually be less than what is required in total.