Exam 2 2007

Exam 2 2007 - AAE 320 Spring 2007 Exam #2 Name: _ 1) (34...

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AAE 320 Spring 2007 Exam #2 Name: _____________________________ 1) (34 pts. total) Below is a simplified farm Balance Sheet. a) (14 pts.) Use the information given and your knowledge of the relationships among Balance Sheet entries to fill in the seven missing cells and then answer the questions below. BALANCE SHEET 12/31/2006 12/31/2005 12/31/2006 12/31/2005 Current Assets 800,000 Current Liabilities 470,000 Non-Current Assets 1,700,000 Non-Current Liabilities 515,000 Total Liabilities 1,020,000 905,000 Equity 1,520,000 Total Assets 2,540,000 2,300,000 Total Liabilities and Equity b) (4 pts.) This Balance Sheet only lists values for generic categories of assets and liabilities. Give one specific farm/agricultural example for each type below: Current Asset: Non-current Asset: Current Liability: Non-current Liability: c) (4 pts.) Explain what the Current Ratio is and why it is important to a farm or business. d) (4 pts.) Based on this Balance Sheet, what is the Current Ratio on 12/31/2006? How does it compare to “typical” Current Ratios for dairy farms as we discussed in class.
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e) (4 pts.) Explain what the Debt to Asset Ratio, the Equity to Asset Ratio, and the Debt to Equity Ratio are and why they are important to a farm or business.
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Exam 2 2007 - AAE 320 Spring 2007 Exam #2 Name: _ 1) (34...

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