Farm Business Management - Final
Exam Study Guide fully solved
The measure of how effective the business is in generating revenue from the production and
management decisions is: - correct answer ✔✔Financial Efficiency
Which statement is used to analyze the profitability of the farm? - correct answer ✔✔Income
Statement
Total Farm Equity divided by total farm assets is: - correct answer ✔✔equity to asset ratio
How is net worth calculated? - correct answer ✔✔total assets - total liabilities
A measurement of what percent of the total assets of the business is owed to the creditors is: -
correct answer ✔✔Debt to asset ratio
A net capital ratio measures: - correct answer ✔✔Solvency
A strong current ratio for a farm business would be: - correct answer ✔✔greater than 1.5:1
The ability of the business to generate enough cash to pay bills without disrupting business
operations is: - correct answer ✔✔Liquidity
The amount of a business owners money or capital that he/she currently has invested in their
own business is referred to as: - correct answer ✔✔equity
, Profit for business is calculated as - correct answer ✔✔total revenue - total costs
T/F: Working capital is defined as current assets minus current liabilities - correct answer
✔✔True
T/F: A net captial ratio of greater than one indicates the business is solvent. - correct answer
✔✔false
T/F: net farm income from operations includes gains or losses from disposal of farm capital
items - correct answer ✔✔false
T/F: objectives are the steps that must be taken in order to attain goals - correct answer
✔✔true
T/F: comparative analysis is comparing ratios over time for the same farm business - correct
answer ✔✔false
T/F: the farm manager is responsible for using the resources of land, labor, and capital wisely for
the business to provide the largest return possible - correct answer ✔✔true
T/F: short term goals may require more than one year to achieve - correct answer ✔✔false
T/F: investments in growing crops should be included in an inventory statement - correct answer
✔✔true
T/F: debt structure is defined as current liabilities divided by total equity - correct answer
✔✔false
Exam Study Guide fully solved
The measure of how effective the business is in generating revenue from the production and
management decisions is: - correct answer ✔✔Financial Efficiency
Which statement is used to analyze the profitability of the farm? - correct answer ✔✔Income
Statement
Total Farm Equity divided by total farm assets is: - correct answer ✔✔equity to asset ratio
How is net worth calculated? - correct answer ✔✔total assets - total liabilities
A measurement of what percent of the total assets of the business is owed to the creditors is: -
correct answer ✔✔Debt to asset ratio
A net capital ratio measures: - correct answer ✔✔Solvency
A strong current ratio for a farm business would be: - correct answer ✔✔greater than 1.5:1
The ability of the business to generate enough cash to pay bills without disrupting business
operations is: - correct answer ✔✔Liquidity
The amount of a business owners money or capital that he/she currently has invested in their
own business is referred to as: - correct answer ✔✔equity
, Profit for business is calculated as - correct answer ✔✔total revenue - total costs
T/F: Working capital is defined as current assets minus current liabilities - correct answer
✔✔True
T/F: A net captial ratio of greater than one indicates the business is solvent. - correct answer
✔✔false
T/F: net farm income from operations includes gains or losses from disposal of farm capital
items - correct answer ✔✔false
T/F: objectives are the steps that must be taken in order to attain goals - correct answer
✔✔true
T/F: comparative analysis is comparing ratios over time for the same farm business - correct
answer ✔✔false
T/F: the farm manager is responsible for using the resources of land, labor, and capital wisely for
the business to provide the largest return possible - correct answer ✔✔true
T/F: short term goals may require more than one year to achieve - correct answer ✔✔false
T/F: investments in growing crops should be included in an inventory statement - correct answer
✔✔true
T/F: debt structure is defined as current liabilities divided by total equity - correct answer
✔✔false
