The price at which total revenue equals total cost.

The yield needed to cover costs at a given price.

Costs that do not change with production levels (e.g., insurance, property taxes).

Costs that change with production (e.g., feed, fuel, seed).

Net Farm Income (Profit)

Net Farm Income = Total Revenue - Total Expenses.

Gross Revenue = Price per Unit × Quantity Sold.

Debt-to-Asset Ratio (Solvency Measure)

Debt-to-Asset Ratio = Total Liabilities / Total Assets.

Current Ratio (Liquidity Measure)

Current Ratio = Current Assets / Current Liabilities.

Return on Assets (ROA)

ROA = (Net Farm Income + Interest Expenses) / Total Assets × 100.

Return on Equity (ROE)

ROE = (Net Farm Income - Family Withdrawals) / Owner’s Equity × 100.

Interest Expense Ratio

Interest Expense Ratio = Total Interest Expenses / Gross Revenue × 100.

Operating Profit Margin Ratio

Operating Profit Margin = (Net Farm Income + Interest Expenses) / Gross Revenue × 100.

Inventory Turnover Ratio

Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory.

Payback Period (for investments)

Payback Period = Initial Investment Cost / Annual Net Cash Flow.

Calculated only on the principal (initial amount borrowed or invested).

Calculated on both the principal and any accumulated interest from previous periods.

An accounting method where revenues and expenses are recorded when they are incurred, regardless of when cash is exchanged.

An accounting method where revenues and expenses are recorded only when cash is received or paid.

Documents that summarize the financial position of a business, including the balance sheet, income statement, and cash flow statement.

A structured list of a company’s financial accounts used in accounting and bookkeeping.

The ability of a business to generate profit over a given period.

A measure of how effectively a business uses its resources to generate income.

A budgeting tool that evaluates the financial impact of small changes in a business.

A complete financial plan that includes all enterprises within a farm business.

A financial statement detailing the revenues and expenses associated with a specific agricultural enterprise.

A budget that projects revenues and expenses for the entire business over a given period.

The process of tracking the flow of money in and out of a business.

The practice of selling agricultural products through different market channels.

Agribusiness Marketing

Marketing strategies specifically applied to agricultural-related businesses.

A classification that determines how a business or individual is taxed.

Expenses that can be subtracted from taxable income to reduce tax liability.

The principle that money available today is worth more than the same amount in the future due to its earning potential.

The current value of a future sum of money, discounted at a given rate.

The process of paying off a loan or investment through regular payments over time.

The evaluation of the profitability and risks associated with an investment.

The potential for financial loss due to business decisions or market conditions.

The potential for financial loss due to changes in market prices.

The potential for financial loss due to legal disputes or changes in regulations.

The potential for financial loss due to variations in agricultural production, such as weather or pests.

The potential for financial loss due to labor shortages, employee turnover, or management issues.

A strategy designed to identify, assess, and mitigate financial and operational risks.

A business structure in which a single individual owns and operates the business.

A business structure where two or more individuals share ownership and management responsibilities.

A legal entity that operates as a business separate from its owners, providing limited liability protection.

Farm Management Flashcards

Student preview

69 questions

Show all answers

1.

FLASHCARD QUESTION

Front

Assets

Back

Resources owned by a business (e.g., cash, equipment, land, inventory).

2.

FLASHCARD QUESTION

Front

Liabilities

Back

Debts or financial obligations of the business.

3.

FLASHCARD QUESTION

Front

Equity (Net Worth)

Back

The owner's financial interest in the business; calculated as: Equity = Assets - Liabilities.

4.

FLASHCARD QUESTION

Front

Depreciation

Back

The loss of value of an asset over time.

5.

FLASHCARD QUESTION

Front

Liquidity

Back

The ability of a business to meet short-term financial obligations.

6.

FLASHCARD QUESTION

Front

Solvency

Back

The ability of a business to meet long-term financial obligations.

7.

FLASHCARD QUESTION

Front

Opportunity Cost

Back

The value of the next best alternative foregone when making a decision.

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