Short Answer / Application : Please write legibly, using complete, grammatically correct sentences. Answers that are not legible will not be graded. Must provide all requested information to receive any credit.

1. (6 points) Use the following information to calculate the following profitability measures (round numbers for ROFA, ROFE, OPMR, and COFD to three decimal places). For each measure, write a brief statement (complete sentence) interpreting what the measure shows about the firms profitability (be specific and use numerical information as supporting evidence). Record your answers in the space provided.

Value of farm production	335,750		Average farm asset value	530,000
Average owner equity	275,000		Total interest expense	37,800
Total operating expenses	225,800		Family living expenses	50,000
Gain/loss on capital asset	(2,500)		Net farm income from operations	72,150
Total expenses	263,600		Income tax expense	12,750

a) Net farm income from operations

b) Net farm income (after tax)

c) Rate of return on farm assets (ROFA)

d) Rate of return on farm equity (ROFE)

e) Operating profit margin ratio (OPMR)

f) Cost of farm debt (COFD)