Farm Business Management CDE Questions and Answers Already Passed

Farm Business Management CDE Questions and Answers Already Passed First step in decision making process Define the problem Short term goals are normally achieved in 1 year How do you find liquidity current ratios Divide current assets by current liabilities How do you find liquidity working capital Subtract current assets by current liabilities How do you find liquidity debt structure Current liabilities divided by total liabilities x 100 How do you find liquidity asset structure Current assets divided by total assets x 100 Cash flow budget projects what over a specific time period ? Money flow, receipts, expenditures Modern farming is best described as Capital intensive A farm budget is A prediction of what will happen Fixed or long term assets Items which are at least marketable and least readily converted into cash without loss sole proprietorship Most common form of business arrangement in the US Long term credit should be used for such items as Value reduction, amortization, diminishing returns Stock certificates When you incorporate a farm business, the assets of the business are transferred to the corporation in exchange for Receipts Income received from sales of commodities produced, services rendered, etc. Liabilities All your debt obligation to others Accrual method of counting Method of cash transactions to determine income Accrual method of counting 2 Farmer includes fluctuations in inventory to determine income at the end of the year, he is using the equilibrium price Price at which consumers are willing to buy all that producers are willing to supply to the market Basis Point Difference between the local cash price of a commodity and the futures price of the commodity is called More risk for the landlord, less risk for the tenant