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AREC 305 (ACTUAL 2025/2026) FINAL EXAM
UPDATED QUESTIONS AND 100% VERIFIED
ANSWERS GRADED A+
Budgeting is an important concept for investment analysis because - (answers)it
allows one to "test a plan out on paper" before committing resources to it
For which of the following is it possible and least desirable to have a value less
than zero? - (answers)Leverage ratio
What does an allowable increase of 30 on a resource's shadow price mean? -
(answers)The shadow price will remain the same with any increase in the
resource
The following would decrease a firm's net worth: - (answers)Selling an asset for
cash at fair market value
Which of the following is a good indication of the solvency of a business? -
(answers)Leverage ratio
Farmer Fred's Debt to Asset Ratio is 0.25. His Debt to Equity ratio is: -
(answers)None of the Above
In an enterprise budget, the following would be classed as an operating cost:
(Dirti 5) - (answers)None of the above
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Which of the following is NOT a step to developing a whole farm plan? -
(answers)None of the above
Shadow prices in Linear Programming (LP) problems: - (answers)can be used to
assess the value of an input resource in a farm planning model
Bankers loaning money to farm operators often require _____ to evaluate loan
security - (answers)A market basis balance sheet
Discribe how the relationship between the rate of return on assets and the rate of
return on equity can provide insight to the effectiveness of debt capital -
(answers)ROA and ROE are both indicators of profitability. Ideally the values at
these equation .... fall under ROE>ROA>i. If this is the case the business is earning
money on debt capital. However, if the equation fall under ROE<ROA<i the firm is
losing money to debt capital and should consider adding asset to the business or
paying off liabilities in order to decrease debt capital.
Briefly explain the difference between the cash basis income statement and a
cash flow statement and their perspective purposes - (answers)A cash basis
income statement shows a summary at the financial status of a firm over a given
interval of time, cash basis reflects income as cash exchanges hand and is used as
a reflection of a firms profitability. A cash flow statement shows the cash inflows
of cash out flows for a business and can be used to find NPV.
Discuss how enterprise budgets and whole farm budges are related -
(answers)Enterprise budgets are the foundation of whole farm budget. An
enterprise budget looks at a specific enterprise and determines its profit potential
by giving a gross margin measurement. A firm owner will prepare multiple
AREC 305 (ACTUAL 2025/2026) FINAL EXAM
UPDATED QUESTIONS AND 100% VERIFIED
ANSWERS GRADED A+
Budgeting is an important concept for investment analysis because - (answers)it
allows one to "test a plan out on paper" before committing resources to it
For which of the following is it possible and least desirable to have a value less
than zero? - (answers)Leverage ratio
What does an allowable increase of 30 on a resource's shadow price mean? -
(answers)The shadow price will remain the same with any increase in the
resource
The following would decrease a firm's net worth: - (answers)Selling an asset for
cash at fair market value
Which of the following is a good indication of the solvency of a business? -
(answers)Leverage ratio
Farmer Fred's Debt to Asset Ratio is 0.25. His Debt to Equity ratio is: -
(answers)None of the Above
In an enterprise budget, the following would be classed as an operating cost:
(Dirti 5) - (answers)None of the above
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Which of the following is NOT a step to developing a whole farm plan? -
(answers)None of the above
Shadow prices in Linear Programming (LP) problems: - (answers)can be used to
assess the value of an input resource in a farm planning model
Bankers loaning money to farm operators often require _____ to evaluate loan
security - (answers)A market basis balance sheet
Discribe how the relationship between the rate of return on assets and the rate of
return on equity can provide insight to the effectiveness of debt capital -
(answers)ROA and ROE are both indicators of profitability. Ideally the values at
these equation .... fall under ROE>ROA>i. If this is the case the business is earning
money on debt capital. However, if the equation fall under ROE<ROA<i the firm is
losing money to debt capital and should consider adding asset to the business or
paying off liabilities in order to decrease debt capital.
Briefly explain the difference between the cash basis income statement and a
cash flow statement and their perspective purposes - (answers)A cash basis
income statement shows a summary at the financial status of a firm over a given
interval of time, cash basis reflects income as cash exchanges hand and is used as
a reflection of a firms profitability. A cash flow statement shows the cash inflows
of cash out flows for a business and can be used to find NPV.
Discuss how enterprise budgets and whole farm budges are related -
(answers)Enterprise budgets are the foundation of whole farm budget. An
enterprise budget looks at a specific enterprise and determines its profit potential
by giving a gross margin measurement. A firm owner will prepare multiple
