Problem set 5 1. From the balance sheet numbers (assignment 4, use the key that is now posted to the website) calculate the Debt to Asset Ratio based on averages from the Beginning and Ending Balance sheet. Would you consider this number (very strong, strong, weak, or critically weak). Explain. 2. From the assignment 4 balance sheet numbers calculate the Current Ratio based on averages from the Beginning and Ending Balance sheet. Would you consider this number (very strong, strong, weak, or critically weak). Explain. Supplementary Information for Income Statement exercise You will need the beginning and ending balance sheet from Homework 4 (or the "change" column). Cash crop sales for year $368,265.00, Cash livestock sales for year (all purchased, none raised) $463.250.00. Ag Program payments for year $22,750.00, Custom Work Income for Year $2,400.00, Expenses, livestock Purchases for year $425,200.00, Feed Purchases for year $17,400.00, Labor $13,250.00, Repairs $14,375.00, seed $28,765.00, Fertilizer $47,253.00, Machine Hire $28,375.00, Vet $2,475.00, Marketing $5,875.00, Fuel $26,200.00, Utilities $5,750.00, Property Tax (Ad Valorem) 3,325.00, Insurance $3,325.00, Cash Rent $24,350.00, Herbicide and Insecticide $27,650.00, Miscellaneous $9,825.00 Be sure to account for the following accrual adjustments: Change in Market livestock inventory (and be able to explain why the sign on this entry is what it is) Change in stored crops inventory (and be able to explain why the sign on this entry is what it is) Change in accounts receivable (and be able to explain why the sign on this entry is what it is) Change in supplies (and be able to explain why the sign on this entry is what it is) Change in accounts payable (and be able to explain why the sign on this entry is what it is) Change in accrued interest (and be able to explain why the sign on this entry is what it it) Management Depreciation for the accounting period is $66,350.00 The farm paid $64,178.00 in farm interest during the year. The farm sold a tractor and some equipment for $8,250.00 more than the management book value at the time of sale. Ignore the "non-farm" section of the income statement Fill in the Blank Example Income Statement and calculate net farm income Assume the farm needs to draw $20,000 from this farm in unpaid family labor. Calculate Return on Assets (based on average assets for the year) for this farm using the FFSG guidelines. Would you consider your calculated measure satisfactory? OSU Balance Sheet AutoSave Of File Home X Cut H 2 Insert = Page Layout Formulas Data Review View Help Search General Copy - Calibri BIU - Paste - 11 - AA - 0.A. EE E Wrap Text Merge & Center - E $ - % Format Painter Clipboard Alignment Number F11 X Ending Balance Beginning Balance 122,250 7,000 110.250 12,000 Net Change 12,000 5,000 120,000 120, 000 0 573,750 69,000 528,750 68,000 -45,000 -1,000 7 Current Assets 8 1) Cash & Checking 9 2) Accounts Receivable 103) Prepaid Expenses 11 4) Cash Investment Growing Crops 12 Inventories 13 5) Marketable Livestock 14 6) Stored Crops and Feed 15 7) Purchased Feed 16 8) Supplies 17 9) Other Current Assets 18 10) TOTAL CURRENT FARM ASSETS 19 Non-Farm Assets 20 11) Savings 21 12) Marketable Securities 22 13) Other Non-Farm Assets 23 24 14) Total Current Assets 1,500 2,000 500 893,500 841,000 52,500 893,500 8 41,000 -52,500 ol 685,375 637,375 - 48,000 26 Non-Current Assets 27 15) Breeding Livestock 28 16) Vehicles 29 17) Machinery, Equipment 30 18) Investment in Capital Leases 31 19) Contracts & Notes Receivable 32 20) Investment in Cooperatives 33 21) Real Estate, Land 34 22) Buildings & Improvements Balance Sheet Sheet1 0 1,275,000 125.000 125,000 1,200,000 125.000 75,000 Type here to search OSU Balance Sheet homewo B 2- Insert View Help AutoSave On File Home 9 X aut Search General Page Layout Formulas Data Review Calibre .1 - A A == BTU 3. 0.A. E Wrap Text Merge & Center. Paste Copy E $. % *%8-48 - Format Painter pboard Number F11 75,000 1,275,000 125,000 1,200,000 125,000 2,085,375 1,962,375 -123,000 33 21) Real Estate, Land 34 22) Buildings & Improvements 35 23) Other Non-Current Assets 36 24) TOTAL NON-CURRENT FARM ASSETS 37 Non-Farm Assets 38 25) Cash Value, Life Insurance 39 26) Investment in Other Entitites 40 27) Other Non-Farm Assets 41 28) TOTAL NON-CURRENT ASSETS 0 123,000 2,085,375 1,962,375 43 29) TOTAL ASSETS 2,978,875 2,803,375 1 75,500 3,500 23,000 3,000 596,200 73,434 22,000 6,500 573,200 74,220 21,000 -1,000 46 Current Liabilities 47 30) Accounts Payable 48 31) Line of Credit and Operating Notes 49 32) Current Portion of Term Debt 50 33) Accrued Interest 51 Taxes Payable 52 34) Ad Valorem 53 35) Employee Payroll Withholding 54 36) Income Taxes 55 37) Deferred Taxes 56 38) Other Accrued Expenses 5739) Other Current Liabilities 58 40) TOTAL CURRENT FARM LIABILITIES 59 Non-farm Liabilities 60 41) Non-Farm Notes & Interest 61 42) Other Non-Farm Liabilities Balance Sheet Sheet1 674,920 19,714 Type here to search ALIEN OSU Balance Sheet home Review View Help Search AutoSave om 9 File Home Insert Page Layout Formulas Data Axa Calibri 1 AA = Ih Copy - Format Painter BIU - 2. .A. E Clipboard 2 Wrap Text Merge & Center. General $ . % 8-2 Alignment Number F11 0 19,714 694,614 674,920 57 39) Other Current Liabilities 58 40) TOTAL CURRENT FARM LIABILITIES 59 Non-farm Liabilities 60 41) Non-Farm Notes & Interest 61 42) Other Non-Farm Liabilities 62 43) TOTAL CURRENT LIABILITIES 694,634 674,920 -19,714 329,166 284,900 282,621 77,225 46,545 7,675 2 0 64 Non-Current Liabilities 65 44) Notes Payable, non-Real Estate 66 45) Notes Payable Real Estate 67 46) Deferred Taxes 68 47) Other Non-Current Liabilities 69 48) TOTAL NON-CURRENT FARM LIABILITIES 70 Non-Farm Liabilities 71 49) Non-Farm Notes 72 50) Other Non-Farm Liabilities 73 51) TOTAL NON-CURRENT LIABILITIES 614,066 559,846 -54,220 0 614,066 559,846 -54,220 74 75 52) Total Liabilities 1,308,700 1,234,766 73,934 77 Owner Equity 78 53) Contributed Capital 79 54) Retained Earnings 80 55) Total Valuation Equity 82 56) TOTAL EQUITY 1,670,175 1,568,609 101,566 84 57) TOTAL LIABILITIES & EQUITY 2,978,875 2,803,375 175,500 Balance Sheet Sheet1 Type here to search ALIEN Problem set 5 1. From the balance sheet numbers (assignment 4, use the key that is now posted to the website) calculate the Debt to Asset Ratio based on averages from the Beginning and Ending Balance sheet. Would you consider this number (very strong, strong, weak, or critically weak). Explain. 2. From the assignment 4 balance sheet numbers calculate the Current Ratio based on averages from the Beginning and Ending Balance sheet. Would you consider this number (very strong, strong, weak, or critically weak). Explain. Supplementary Information for Income Statement exercise You will need the beginning and ending balance sheet from Homework 4 (or the "change" column). Cash crop sales for year $368,265.00, Cash livestock sales for year (all purchased, none raised) $463.250.00. Ag Program payments for year $22,750.00, Custom Work Income for Year $2,400.00, Expenses, livestock Purchases for year $425,200.00, Feed Purchases for year $17,400.00, Labor $13,250.00, Repairs $14,375.00, seed $28,765.00, Fertilizer $47,253.00, Machine Hire $28,375.00, Vet $2,475.00, Marketing $5,875.00, Fuel $26,200.00, Utilities $5,750.00, Property Tax (Ad Valorem) 3,325.00, Insurance $3,325.00, Cash Rent $24,350.00, Herbicide and Insecticide $27,650.00, Miscellaneous $9,825.00 Be sure to account for the following accrual adjustments: Change in Market livestock inventory (and be able to explain why the sign on this entry is what it is) Change in stored crops inventory (and be able to explain why the sign on this entry is what it is) Change in accounts receivable (and be able to explain why the sign on this entry is what it is) Change in supplies (and be able to explain why the sign on this entry is what it is) Change in accounts payable (and be able to explain why the sign on this entry is what it is) Change in accrued interest (and be able to explain why the sign on this entry is what it it) Management Depreciation for the accounting period is $66,350.00 The farm paid $64,178.00 in farm interest during the year. The farm sold a tractor and some equipment for $8,250.00 more than the management book value at the time of sale. Ignore the "non-farm" section of the income statement Fill in the Blank Example Income Statement and calculate net farm income Assume the farm needs to draw $20,000 from this farm in unpaid family labor. Calculate Return on Assets (based on average assets for the year) for this farm using the FFSG guidelines. Would you consider your calculated measure satisfactory? OSU Balance Sheet AutoSave Of File Home X Cut H 2 Insert = Page Layout Formulas Data Review View Help Search General Copy - Calibri BIU - Paste - 11 - AA - 0.A. EE E Wrap Text Merge & Center - E $ - % Format Painter Clipboard Alignment Number F11 X Ending Balance Beginning Balance 122,250 7,000 110.250 12,000 Net Change 12,000 5,000 120,000 120, 000 0 573,750 69,000 528,750 68,000 -45,000 -1,000 7 Current Assets 8 1) Cash & Checking 9 2) Accounts Receivable 103) Prepaid Expenses 11 4) Cash Investment Growing Crops 12 Inventories 13 5) Marketable Livestock 14 6) Stored Crops and Feed 15 7) Purchased Feed 16 8) Supplies 17 9) Other Current Assets 18 10) TOTAL CURRENT FARM ASSETS 19 Non-Farm Assets 20 11) Savings 21 12) Marketable Securities 22 13) Other Non-Farm Assets 23 24 14) Total Current Assets 1,500 2,000 500 893,500 841,000 52,500 893,500 8 41,000 -52,500 ol 685,375 637,375 - 48,000 26 Non-Current Assets 27 15) Breeding Livestock 28 16) Vehicles 29 17) Machinery, Equipment 30 18) Investment in Capital Leases 31 19) Contracts & Notes Receivable 32 20) Investment in Cooperatives 33 21) Real Estate, Land 34 22) Buildings & Improvements Balance Sheet Sheet1 0 1,275,000 125.000 125,000 1,200,000 125.000 75,000 Type here to search OSU Balance Sheet homewo B 2- Insert View Help AutoSave On File Home 9 X aut Search General Page Layout Formulas Data Review Calibre .1 - A A == BTU 3. 0.A. E Wrap Text Merge & Center. Paste Copy E $. % *%8-48 - Format Painter pboard Number F11 75,000 1,275,000 125,000 1,200,000 125,000 2,085,375 1,962,375 -123,000 33 21) Real Estate, Land 34 22) Buildings & Improvements 35 23) Other Non-Current Assets 36 24) TOTAL NON-CURRENT FARM ASSETS 37 Non-Farm Assets 38 25) Cash Value, Life Insurance 39 26) Investment in Other Entitites 40 27) Other Non-Farm Assets 41 28) TOTAL NON-CURRENT ASSETS 0 123,000 2,085,375 1,962,375 43 29) TOTAL ASSETS 2,978,875 2,803,375 1 75,500 3,500 23,000 3,000 596,200 73,434 22,000 6,500 573,200 74,220 21,000 -1,000 46 Current Liabilities 47 30) Accounts Payable 48 31) Line of Credit and Operating Notes 49 32) Current Portion of Term Debt 50 33) Accrued Interest 51 Taxes Payable 52 34) Ad Valorem 53 35) Employee Payroll Withholding 54 36) Income Taxes 55 37) Deferred Taxes 56 38) Other Accrued Expenses 5739) Other Current Liabilities 58 40) TOTAL CURRENT FARM LIABILITIES 59 Non-farm Liabilities 60 41) Non-Farm Notes & Interest 61 42) Other Non-Farm Liabilities Balance Sheet Sheet1 674,920 19,714 Type here to search ALIEN OSU Balance Sheet home Review View Help Search AutoSave om 9 File Home Insert Page Layout Formulas Data Axa Calibri 1 AA = Ih Copy - Format Painter BIU - 2. .A. E Clipboard 2 Wrap Text Merge & Center. General $ . % 8-2 Alignment Number F11 0 19,714 694,614 674,920 57 39) Other Current Liabilities 58 40) TOTAL CURRENT FARM LIABILITIES 59 Non-farm Liabilities 60 41) Non-Farm Notes & Interest 61 42) Other Non-Farm Liabilities 62 43) TOTAL CURRENT LIABILITIES 694,634 674,920 -19,714 329,166 284,900 282,621 77,225 46,545 7,675 2 0 64 Non-Current Liabilities 65 44) Notes Payable, non-Real Estate 66 45) Notes Payable Real Estate 67 46) Deferred Taxes 68 47) Other Non-Current Liabilities 69 48) TOTAL NON-CURRENT FARM LIABILITIES 70 Non-Farm Liabilities 71 49) Non-Farm Notes 72 50) Other Non-Farm Liabilities 73 51) TOTAL NON-CURRENT LIABILITIES 614,066 559,846 -54,220 0 614,066 559,846 -54,220 74 75 52) Total Liabilities 1,308,700 1,234,766 73,934 77 Owner Equity 78 53) Contributed Capital 79 54) Retained Earnings 80 55) Total Valuation Equity 82 56) TOTAL EQUITY 1,670,175 1,568,609 101,566 84 57) TOTAL LIABILITIES & EQUITY 2,978,875 2,803,375 175,500 Balance Sheet Sheet1 Type here to search ALIEN