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A farmer does a quick FBA and finds the following (comparable farms in bold) Interest expense ratio=.03 0.05) Operating expense ratio=.55 (.57) Depreciation Expense ratio=.00
A farmer does a quick FBA and finds the following (comparable farms in bold) Interest expense ratio=.03 0.05) Operating expense ratio=.55 (.57) Depreciation Expense ratio=.00 0.03) Price received for market livestock (cwt)= $103 ($100) Current Ratio= 4.3 (1.7) Working capital= $650,000 ($200,000) You are hired to work with the producer above. The producer has always believed in large cash reserves. Assume the operator has a large real estate loan ($5,000,000 or more), with over 10 year remaining. If the operator made a one time debt payment of $450,000, and interest rates are currently 5%, how much would profits be improved each year? A farmer does a quick FBA and finds the following (comparable farms in bold) Interest expense ratio=.03 0.05) Operating expense ratio=.55 (.57) Depreciation Expense ratio=.00 0.03) Price received for market livestock (cwt)= $103 ($100) Current Ratio= 4.3 (1.7) Working capital= $650,000 ($200,000) You are hired to work with the producer above. The producer has always believed in large cash reserves. Assume the operator has a large real estate loan ($5,000,000 or more), with over 10 year remaining. If the operator made a one time debt payment of $450,000, and interest rates are currently 5%, how much would profits be improved each year
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