1. Critical Thinking: If more debt is taken on by a farmer to purchase assets (assets are increased and liabilities are increased by the same dollar amount), the debt to asset ratio will:
   1. Increase
   2. Decrease
   3. Stay constant
   4. Critical Thinking: Use the accounting equation to help you. Using $20,000 in cash (cash goes out) and a new loan of $80,000 to purchase land for $100,000 will cause equity to:
      1. Increase
      2. Decrease
      3. Not change

1. Which ratio shows how a business is financed between creditors and owners?
   1. Debt to asset
   2. Debt to equity
   3. Return on equity

(a)Improved or (b)Worsened regarding Ratios. Did the ratio improve or worsen from 2018 to 2019?

1. A farmer's Current Ratio (Current Assets/Current Liabilities) was 2.15 for 2018 and 1.75 for 2019.
2. A farmer's Debt-to-Equity (Total Liabilities/Total Equity) was .65 for 2018 and .45 for 2019.
3. A farmer's Return-on-Assets (EBITDA/Total Assets) was 5.6% for 2018 and 6.2% for 2019.
4. A farmer's operating expense ratio went from 77% to 80% from 2018 to 2019.

1. Why is EBITDA useful for ratios in the agriculture industry?

1. Why are return on asset, return on equity, and asset turnover ratios lower in the agriculture industry?