- Liquidity

- Solvency

- Profitability

- Repayment Capacity

- Financial efficiency

- ability to meet current financial obligations

- structural and operational

- Working Capital

- Current Ratio

- Cash Flow Coverage Ratio

- Current assets/ Current Liabilities

- the higher the ratio, the more liquid the business

- evaluates what would happen if the assets are sold and all liabilites are paid

- a longer term measure of the ability of the business to meet financial obligations

- Debt to Asset Ratio

-Debt to Equity Ratio

- Equity to Asset Ratio

- expresses total liabilites as a proportion of total assets influenced by the value placed on the assets

- a reasonable standard for the ratio will vary from one type of enterprise to another

- Leverage Ratio

- Reflects the extent to which farm debt capital is being combined with equity capital

- a ratio of less than 1:1 means that creditors have less money in the business than the owner

- Expresses the proportion of total assets financed by the owners equity capital

- the mirror image of the debt to asset ratio

- Return on Assets

- Return on Equity

- Operating Profit Margin Ratio

Net Farm Income from Operations + Interest Expense - Family Living Withdrawals / Average Total Assets

- measures the rate of return on assets and is often used as an overall measure of profitability

Net Farm Income from Operations - Family Living Withdrawals/ Average Total Equity

- measures the rate of return on owners equity employed in the business

Net Farm Income from Operations + Interest Expense - Family Living Withdrawals/ Gross Farm Revenue

- measures the returns to capital per dollar of gross farm revenue

1. use non farm income to offset farm losses

2. the borrower is inheriting or being gifted money faster than the business is losing it

3. the value of the business assets are appreciating faster than the business is losing money

- term debt and capital lease coverage ratio

- capital replacement and term debt repayment margin

- debt to income ratio

Net Income from Operations + Non Farm Income + Depreciation + Interset on Term Debt - Income Tax - Family Living Withdrawals/ Term Debt Principal and Interest Payments

- provides a measure of the ability of a borrower to cover all required term debt and capital payments

- Asset Turnover Ratio

- measures how efficiently assets are being used to generate revenue

- the higher the ratioi, the more efficient assets are being utilized

- when the asset turnover ratio is multiplied by the operating profit margin, the result is the rate of return on assets