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)
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)
