Development and Use of Financial Ratios for the Evaluation of Farm Businesses

摘要

The farm financial experience of the 1980's highlights the need for acceptable standards of performance in measuring farm financial health. The report develops a series of financial ratios that can be used in monitoring and comparing the financial performance of U.S. farm businesses. Ratio analysis shows the relationships between financial performance elements (solvency, liquidity and coverage, efficiency, and profitability) and various farm characteristics (such as farm size, production specialty, and production region). Ratio analysis can give farmers, lenders, investors, analysts, and policymakers a more complete perspective on the performance of a farm or group of farms and may help identify actions to modify the performance. The study uses data from the 1986 Farm Costs and Returns Survey.