FBM Chapter 3 Financial Analysis

Front

What is the primary purpose of financial statements in farm and ranch management?

Back

To monitor financial progress and compare past performances

Front

What are the two common ways to perform ratio analysis?

Back

Trend analysis and comparative analysis

Front

Which of the following is NOT a measure used in financial ratio analysis for farm management? Liquidity, Solvency, Profitability, Crop rotation

Back

Crop rotation

Front

What is the definition of liquidity in a business context?

Back

The ability to generate enough cash to pay bills without disrupting operations.

Front

How is working capital defined?

Back

Current assets minus current liabilities

Front

What does asset structure measure?

Back

Current assets divided by total assets

Front

What does solvency measure in a business?

Back

The ability to cover debts with assets

Front

Which of the following is a solvency measure? Gross profit margin, Return on investment, Net capital ratio, Inventory turnover

Back

Net capital ratio

Front

How is the debt to asset ratio defined?

Back

Total liabilities divided by total farm assets

Front

What does an increase in the equity to asset ratio indicate?

Back

Increase in owner's claim against the farm's assets