Briefly explain if the following statements are true or false. a. Rules of thumb for farm businesses are constant with those in other production sectors. b. Sustainability analysis is the last step of analysing farm financials. c. In a financially healthy farm business, atleast 30% of the total capital employed should be financed by own capital
Briefly explain if the following statements are true or false. a. Rules of thumb for farm businesses are constant with those in other production sectors. b. Sustainability analysis is the last step of analysing farm financials. c. In a financially healthy farm business, atleast 30% of the total capital employed should be financed by own capital
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Briefly explain if the following statements are true or false.
a. Rules of thumb for farm businesses are constant with those in other production sectors.
b. Sustainability analysis is the last step of analysing farm financials.
c. In a financially healthy farm business, atleast 30% of the total capital employed should be
financed by own capital.
d. A leverage ratio of 1:1 reflects growth in farmer’s own capital
e. A turnover ratio of 1,2:1 is considered healthy for maize producing farming business.
f. A leverage ratio of 3.8:1 is considered risky for a farming business that has been operational
for 2 years.
g. A farm profitability of 55% and a profitability on own capital of 40% indicates a farm
business with a positive financial leverage.
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