Farm Business Management CDE – Formulas | 2026 Update | Questions & Answers – 100% Correct (A+)

Farm Business Management CDE - Formulas |
2026 UPDATE | QUESTIONS AND ANSWERS
100% CORRECT ALREADY GRADED A+


Net Farm Income from Operations (NFIFO) - ANSWERS-total revenue - total
expenses

note: total expenses= operating expenses+ fixed expenses



Net Farm Income (NFI) - ANSWERS-NFIFO + any gain or loss on sale capital
items



Returns on Assets ( ROA) - ANSWERS-(return to assets)/ average total
assets



Return To Assets - ANSWERS-NFIFO+ interest(from the interest statement)-
opportunity cost



Return on Equity (ROE) - ANSWERS-(return to equity)/ average total equity



Return to equity - ANSWERS-NFIFO-opportunity cost of unpaid operator and
family labor



Cost of Debt (COD) - ANSWERS-total interest(from income statement) /
average total liabilities (from net worth statement)



ROA>COD - ANSWERS-Then ROE will be higher than ROA

, ROA<COD - ANSWERS-then ROE will be lower than ROA



Operating Profit Margin Ratio (OPMR) - ANSWERS-(Operating profit margin/
total revenue from income statement)x100



Earnings before Interests, Taxes, Depreciation, and Amortization (EBITDA) -
ANSWERS-Net Farm Income from operations + interest
expenses,depreciation expenses, and amortization expenses.

Total Assets - ANSWERS-Total Liabilities + Net Worth



Net Worth(equity) - ANSWERS-Total Assets -Total Liabilities



Annual Depreciation - ANSWERS-(purchase price - Salvage value)/ Economic
life



Current Ratio - ANSWERS-Current assets/ current liabilities



Working Capital - ANSWERS-Current Assets- Current Liabilities



Debt structure (debt ratio) - ANSWERS-Current Liabilities/ total Liabilities



Asset structure ( asset ratio) - ANSWERS-Current Assets/ Total Assets



Net capital Ratio - ANSWERS-total farm assets/ total farm liabilities



Debt to Asset ratio - ANSWERS-total liabilities/ total assets

( >0.7= poor,0.4-0.7=fair, <0.4=good)